A mortgage borrower has an outstanding debt at interest rate of J12= 6% and 450 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 1200 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= 6% and 450 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 1200 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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