A mortgage borrower has an outstanding debt at interest rate of J12= 15% and 1050 TL monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay 1600 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.
A mortgage borrower has an outstanding debt at interest rate of J12= 15% and 1050 TL monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay 1600 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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A mortgage borrower has an outstanding debt at interest rate of J12= 15% and 1050 TL monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay 1600 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.
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