What is the net present value of refinancing

Assignment Help Financial Management

Reference no: EM131348556

Suppose that five years ago you borrowed $500,000 using a 30-year fixed-rate mortgage with an annual interest rate of 8% with monthly payments and compounding. The interest rate on 30-year fixed-rate mortgages has fallen to 7.5% and you are wondering whether you should refinance the loan. Refinancing costs are expected to be 5% of the new loan amount.

What is the net present value of refinancing if you make all of the scheduled payments on the new loan?

What is the net present value of refinancing if you pay off the new loan at the end of the 3rd year?

How many payments do you need to make on the new loan in order for refinancing to have a positive net present value?

Reference no: EM131348556

Questions Cloud

Determine blade tip velocity of delavals first steam turbine : Determine the blade tip velocity of DeLaval's first steam turbine. It had a rotor diameter of 3.00 inches and ran at 40.0 × 103 rpm.

Describe the four basic types of market structures : Although there are many different examples of economies in the world, all of them demonstrate one or more of the four basic types of market structure. For this assignment, in your own words,

What is aftertax cash flow from sale of this asset : Consider an asset that costs $688,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $181,000. If the relevant tax rate is 35..

Determine the isentropic rankine cycle thermal efficiency : Determine the isentropic Rankine cycle thermal efficiency.- The isentropic Rankine cycle thermal efficiency that would occur if the steam were not reheated.

What is the net present value of refinancing : Suppose that five years ago you borrowed $500,000 using a 30-year fixed-rate mortgage with an annual interest rate of 8% with monthly payments and compounding. What is the net present value of refinancing if you make all of the scheduled payments on ..

Production of chocolate and coffee : Suppose the north and south are trading cities and have the following production of chocolate and coffee: North output per hour is 2 chocolate and 8 coffee.

Determine the thermal efficiency and the net power per unit : Steam enters the high-pressure turbine of a Rankine cycle power plant at 1200. psia and 700.°F and exits as a saturated vapor.- Determine the thermal efficiency and the net power per unit mass flow rate of steam for this plant.

How are the two countries similar or different : Compare and Contrast UAE and another country of your choice - Repeat the introduction in a different way, giving all the similarities or differences you have covered in your Essay.

Operating in a monopolistically competitive market : You know that you are operating in a monopolistically competitive market, that is, you are a small part of a large market with many competitors in this market. From data collected on the Widget Market, you know that market demand has recently decr..

User Account

All Pages