Refinance Decision. please help me understand how my teacher got these numbers.

information is an explanation and does not need to be shown on the exam. 1. (Refinance Decision) Original Loan $120,000 Amount Terms Cost of Refinancing 5%, 30 3%, New Loan $3,500 The original loan has been outstanding for 3 years. The owner plans to retain ownership of the property for another 8 years. The opportunity cost is 9%. Should the loan be refinanced? Remember to answer this question using Present Value (PV) Analysis. The formula used for present value (B) is: 09/12= .0075 new loan held 8 years or 96 months. See Step information below this table. A. Do the Table to Calculate the change in MP and the change in LB: Refinance Cost=? AMP (MPVIFA.0075, 8 x12) + ALB (MPVIF .0075, 96) MPVIFA on the Table Part "A "uses .05/12 and N x 12. Loan Original Loan 5%, 30 compound monthly (30-3)12 Amount MPVIFA MP MPVIFA1 120,000 (30-3-8)12 months 120,000/186.2816187 $644.19 177.6075888 $114413.03 146.9987811 $94695.14 LB1 MPVIFA2 LB2 New $114413.03/221.8768147 -515.66 N/A N/A 173.6288607-89,533.46 03/12, (27-8)12 3%, 27 (monthly) $128.53 Change MP change LB 5,161.68 LB=MP (MPVIFA) on the above table: Additional step by step information for understanding the table in part a follows: Step 1: Original loan: (read Table horizontally) calculate MP Step 2: Original loan: Calculate LB1=MP (MPVIFA 30-3 lapsed) times 12 mos Step 3: Original Loan: Calculate LB 2= MP (MPVIFA remaining time 30-3-8 x 12 mos Step 4: New Loan: Use LB1 of Original loan amount for New Loan which is to be refinanced use 30-3 =27 years adjust by compounding 27 x 12 months using the new rate of 3% or.03/12 Step 5: New Loan: Calculate LB place under LB2 column MP new (MPVIFA new rate, (27-8)12 months