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A C D ( Mortgage restructuring ) An investor purchased a small apartment building for $ 2 5 0 , 0 0 0 . She
A
C
D
Mortgage restructuring An investor purchased a small apartment building for
$ She made a down payment of $ and financed the balance with a
year, fixedrate mortgage at annual interest, compounded monthly. For exactly
years she has made equalsized monthly payments as required by the terms of the loan.
Now she has the opportunity to restructure the mortgage by refinancing the balance. She
could borrow the current balance, pay off the original loan, and assume a new loan for the
balance. No points or any other charges are involved in the transaction. The new loan is a
year, fixedrate loan at compounded monthly, to be paid in equal monthly install
ments. Suppose she has a riskfree savings account that pays compounded monthly.
Should she restructure the mortgage?
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