A homeowner took out a 25-year fixed-rate mortgage of $110,000. The mortgage was taken out 13 years ago at a rate of 7.85 percent. If the homeowner refinances, the charges will be $1,900. What is the highest interest rate at which it would be beneficial to refinance the mortgage? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. APR %

A homeowner took out a 25-year fixed-rate mortgage of $110,000. The mortgage was taken out 13 years ago at a rate of 7.85 percent. If the homeowner refinances, the charges will be $1,900. What is the highest interest rate at which it would be beneficial to refinance the mortgage? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. APR %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Similar questions

Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
A homeowner took out a 20-year fixed-rate mortgage of $185,000. The mortgage was taken out 9 years ago at a rate of 6.8 percent. If the homeowner refinances, the charges will be $2,950. What is the highest interest rate at which it would be beneficial to refinance the mortgage? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
A homeowner took out a 20-year fixed-rate mortgage of $70,000. The mortgage was taken out 13 years ago at a rate of 7.45 percent. If the homeowner refinances, the charges will be $1,500. What is the highest interest rate at which it would be beneficial to refinance the mortgage? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) APR % ____
A homeowner took out a 15-year fixed-rate mortgage of $160,000. The mortgage was taken out 5 years ago at a rate of 8 percent. If the homeowner refinances, the charges will be $1,200. What is the highest interest rate at which it would be beneficial to refinance the mortgage?
An investor obtained a fully amortizing mortgage five years ago for $95,000 at 11 percent for 30 years. Mortgage rates have dropped, so that a fully amortizing 25-year loan can be obtained at 9.8 percent. There is no prepayment penalty on the mortgage balance of the original loan, but three points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly. Assume that the investor borrows only an amount equal to the outstanding balance of the loan.. What is the loan balance at the end of year 5? a. $87,691.09 b. $101,537.05 c. $92,306.41 d. $92,000.00
An investor obtained a fully amortizing mortgage 5 years ago for $95,000 at 11 percent for 30 years. Mortgage rates have dropped so that a fully amortizing 25-year loan can be obtained at 10 percent. There is no prepayment penalty on the mortgage balance of the original loan, but three points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly.a. Should the borrower refinance if he plans to own the property for the remaining loan term? Assume that the investor borrows only an amount equal to the outstanding balance of the loan.b. Would your answer to part (a) change if he planned to own the property for only five more years?
The Switzers are nearing the end of the first five-year term of a $95,000 mortgage loan with a 25-year amortization. The interest rate has been 6.5% compounded semiannually for the initial term. How much will their monthly payments increase if the interest rate upon renewal is 7.5% compounded semiannually and the original amortization period is continued? (Do not round the intermediate calculations. Round your answer to two decimal places.)
Consider a 30-year, traditional mortgage on a $220,000 property. With 30% down payment and a 3% APR. Mortgage payments are made monthly. What is the 216th payment? Note: Show your answer in units of dollars, use plain numbers with at least two digits after the decimal (e.g., for $12,345.67, type 12345.67).
You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 34-year mortgage loan for 80 percent of the $3,240,000 purchase price. The monthly payment on this loan will be $15,700. What is the APR on this loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the EAR on this loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
You have been asked to determine whether it is beneficial for a homeowner to refinance their current mortgage loan. Their loan for 200,000 was originated three years ago and was a 30 year FRM with an interest rate of 7.5%. Their mortgage payment is currently $1,398.43. This loan now currently has 27 years remaining, and the homeowner is looking to refinance their current balance (i.e. the balance at the end of month 36) into a new 27 year FRM with an interest rate of 5.5%. How much will the homeowner save in interest over the 27 years remaining, assuming no prepayments? Round to the nearest dollar.
You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 35-year mortgage loan for 85 percent of the $3,350,000 purchase price. The monthly payment on this loan will be $16,800. a. What is the APR on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the EAR on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)