Question A: Existing Loan: Loan Amount Rate Term Payment Balance EOYS New Loan 11 Loan amount 12 Refinance Costs 13 Repayment Fee 14 Rate 15 Term 16 Payment 17 18 Benefits (Cost) 19 Total 20 Net 21 PV 22 23 Question B 24 Remaining Term 25 Existing Loan 26 New Loan 27 Difference 28 29 Hold 30 Total 31 Net 32 PV 33 34 Question C 35 Newloan 80,000 10.00% 360 Months $702.06 $77,259.46 60 Refinance $77,259.46 $3,090.38 4\% Refinance Costs $3,862,97 5\% Repayment Fee 8% 300 Months $596.30 $105.76 $31,726.87 $24,773.52 $6,748.91 204 Months $68,747.56 $66,384.24 $2,363.31 96 Months $12,515.91 $5,562.56 $1,776.44 Sheet1 (Show 5 steps as what we learned in class; List PV, FV, PMT, N and I/Y in each stepN Five years ago a borrower incurred a mortgage for $80,000 at 10% for 30 years, monthly payments. Currently the market rate is 8% on 25 -year mortgages. The existing mortgage has a prepayment penalty of 5% of the outstanding balance and the lender will charge 4% financing cost on a new loan. A. If the borrower plans to hold either mortgage for the next 25 years (we suppose the term of new loan is 25 years, which equals to the number of periods the old loan remains) 1) Without discounting, should he/she refinance, what is the net benefits? 2) With discounting, should he/he refinance, what is the net benefits? B. If the borrower plans to hold either mortgage for 8 more years only (we suppose the term of new loan is 25 years, which equals to the number of periods the old loan remains) 1) Without discounting, should he/she refinance, what is the net benefits? 2) With discounting, should he/he refinance, what is the net benefits? C. If the new loan term is 30 years and the borrower plans to hold it until maturity 1) Without discounting, should he/she refinance, what is the net benefits? 2) With discounting, should he/he refinance, what is the net benefits