Kristjan borrowed 140 000 from a bank 4 years ago. The annual interest rate was 6.6% at the time and the repayment schedule is based on monthly annuity payments. There is still 8 years to fully repay the debt. Now Kristjan approached the competitive bank and asked for possibilities to refinance. The bank was sympathetic to the request and offered 4.8% as an interest rate. However, the refinancing fee is 1.5% of the loan balance. Questions: a) Find the initial monthly loan payment. b) Find the loan balance before refinancing. c) Find the new monthly loan payment. d) Given the fee, should Kristjan refinance?
Kristjan borrowed 140 000 from a bank 4 years ago. The annual interest rate was 6.6% at the time and the repayment schedule is based on monthly annuity payments. There is still 8 years to fully repay the debt. Now Kristjan approached the competitive bank and asked for possibilities to refinance. The bank was sympathetic to the request and offered 4.8% as an interest rate. However, the refinancing fee is 1.5% of the loan balance. Questions: a) Find the initial monthly loan payment. b) Find the loan balance before refinancing. c) Find the new monthly loan payment. d) Given the fee, should Kristjan refinance?
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 19P
Related questions
Question
Kristjan borrowed 140 000 from a bank 4 years ago. The annual interest rate was 6.6% at the time and the repayment schedule is based on monthly annuity payments. There is still 8 years to fully repay the debt. Now Kristjan approached the competitive bank and asked for possibilities to refinance. The bank was sympathetic to the request and offered 4.8% as an interest rate. However, the refinancing fee is 1.5% of the loan balance.
Questions:
a) Find the initial monthly loan payment.
b) Find the loan balance before refinancing.
c) Find the new monthly loan payment.
d) Given the fee, should Kristjan refinance?
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