1. Ten years ago you took out a $540,000, 30-year mortgage with an annual interest rate of 6 percent.

a. What is the monthly payment?

b. But since you took out that loan, interest rates have dropped. You now have the opportunity to refinance your loan at an annual rate of 4.5 percent over 20 years. You need to know what the outstanding balance on your current loan is so you can take out a lower-interest-rate loan and pay it off. If you just made the 120th payment and have 240th payments remaining, whats your current loan balance?

c. With refinancing, what much can you save every month?