Five years a borrower incurred a mortgage for $80,000 at 10 percent for 30 years, monthly payments. Currently the market rate is 8 percent on 25-year mortgages. The existing mortgage has a prepayment penalty of 5 percent of the outstanding balance at prepayment for the first 10 years of the mortgage and the lender will charge 4 percent financing cost on a new loan. The borrower's opportunity investment rate is 8 percent. The borrower is considering refinancing the payoff of the loan (remaining balance + prepayment penalty). Note: the borrowers opportunity investment rate is the same as the new mortgages interest rate (8%). Use this rate when you calculate the present value of all savings

1. If the new loan term is 30 years and the borrower plans to hold it until maturity, should they refinance?

2. If the new loan term is 15 years and the borrower plans to hold it until maturity, should they refinance?