10. Harder. (A case of deferred refinancing). You will make your first payment on your $100,000 (PV) school loan in exactly one month. The loan will run for 120 months (10 years) and has a competitive interest rate of 7%. The risk free rate in the economy is currently 4%. The lender makes you the following offer....if you will put your account on an automatic withdrawal system and if you do make the first 3 years of payments on time, then at the end of the third year they will cut the interest rate (on the remaining seven years of the loan) to a special rate of 3%. Another way of stating this is... if you make 36 payments on time though automatic withdrawal, then they will "refinance" your loan in the future. If the offer costs you $30 to sign up for, then what NPV does the offer provide for you today? a. $10,227 b. $9,722 c. $9,353 d. $10,578