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Please show how you got to the anwsers Suppose that a 30-year, nominal rate 8%, $100,000 mortgage payable monthly is to be refinanced at the
Please show how you got to the anwsers
Suppose that a 30-year, nominal rate 8%, $100,000 mortgage payable monthly is to be refinanced at the end of 8 years for an additional 15 years at 6% with a refinancing closing cost amount of $1500 and 2 points. The points are each 1% of the refinanced balance including closing costs, and costs plus points are extra amounts added to the initial balance of the refinanced mortgage. Suppose that new pattern of payments is to be valued at each of the nominal interest rates 6%, 7%, or 8%, due to uncertainty about what the interest rate will be in the future and that these valuations will be taken into account in deciding whether to take out the new loan (a) What is the monthly payment amount of the initial loan? (b) What is the present value as of time 0 (the beginning of the old loan) of the payments made through the end of the 8th year? (c) What is the present value, as of the end of 8 years, of the payments still to be made under the old mortgage? (d) What is the new refinanced amountStep by Step Solution
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