Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A few years back, Dave and Jana bought a new home. They borrowed $ 2 3 0 , 4 1 5 at an annual fixed

A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49%(15-year term) with monthly payments of $1,881.46. They just made their 40th payment, and the current balance on the loan is $208,555.87.
Interest rates are at an all-time low, and Dave and Jana are thinking of refinancing to a new 15-year fixed loan, Their bank has made the following offer: 15-year term, 3.0%, plus out-of-pocket costs of $2,937. The out-of-pocket costs must be paid in full at the time of refinancing.
Build a spreadsheet model to evaluate this offer. The Excel function:
rate, nper, pv, fv, type)
calculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are:
rate = the interest rate for the loan
nper = the total number of payments
v= present value (the amount borrowed)
fv= future value [the desired cash balance after the last payment (usually 0)]
type = payment type end of period, 1= beginning of the period
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The ImpactAssets Handbook For Investors

Authors: Jed Emerson

1st Edition

1783087293, 978-1783087297

More Books

Students also viewed these Finance questions

Question

What is the principle of thermodynamics? Explain with examples

Answered: 1 week ago