1. A borrower has secured a 30 year, $110,000 loan at 8%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7%. However, the up-front fees, which will be paid in cash, are $3,000.

1. What is the monthly payment on the initial loan?
2. What is the loan balance and the new monthly payment at the time of refinancing?
3. What is the return on investment if the borrower expects to remain in the home for the next fifteen years after refinancing?
4. Suppose you can earn a risk-free return of 3% on your $3,000 at the time of refinancing. Would the refinancing be a sensible choice?

Does anyone know how to solve these four problems with the details?