17. You bought a house a year ago for $250,000, borrowing $200,000 at 10% on loan (with monthly payments). Interest rates have since come down to 9%. You can refinance your mortgage at this rate, with a closing cost that will be 3% of the loan. Your opportunity cost is 8%. Ignore tax effects. a. How much are your monthly payments on your current loan (at 10%)? b. How would your monthly payments be if you could refinance your mortgage at 9% (with a 30-year term loan)? You plan to stay in this house for the next 5 years. Given the refinancing cost (3% of the C.

17. You bought a house a year ago for $250,000, borrowing $200,000 at 10% on loan (with monthly payments). Interest rates have since come down to 9%. You can refinance your mortgage at this rate, with a closing cost that will be 3% of the loan. Your opportunity cost is 8%. Ignore tax effects. a. How much are your monthly payments on your current loan (at 10%)? b. How would your monthly payments be if you could refinance your mortgage at 9% (with a 30-year term loan)? You plan to stay in this house for the next 5 years. Given the refinancing cost (3% of the C.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter4: Going Into Debt

Section: Chapter Questions

Problem 25AA

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