What is the internal rate of return on the loan

Assignment Help Finance Basics

Reference no: EM131948336

Question: A borrower has a 30 year fully amortizing FRM, with a $300,000 balance, 4.5% rate. There is a 3% prepayment penalty on this loan if it is repaid before 5 years. After 5 years of holding this loan, market interest rates have dropped and the borrower is considering a refinance. A 25 year fully amortizing FRM is available with a 3% rate, and has $3,000 in origination fees. The borrower plans to finance the cost of refinance by adding these fees to the new balance of the loan. If the borrower plans to hold the new loan until maturity, what is the internal rate of return on this loan? (Round to 2 decimal places; if your answer is ten and half percent, enter 10.50.)

Reference no: EM131948336

Questions Cloud

Differences in contingency and situational leadership : Compare and contrast the differences in contingency and situational leadership. Then, determine the key influences they each have on organizational performance.

How much is the prepayment fee : Should the borrower choose to prepay this loan at any time after the end of the 10th year, a prepayment fee of 2% of balance will be changed.

Name the disadvanatages of form of business : What form of business ownership is the easiest to start and end. Name the disadvanatages of this form of business.

Compute the amount of each payment : You are borrowing $21,800. The terms of the loan call for monthly payments for 5 years at an annual 8.25%interest rate. What is the amount of each payment?

What is the internal rate of return on the loan : A borrower has a 30 year fully amortizing FRM, with a $300,000 balance, 4.5% rate. There is a 3% prepayment penalty on this loan if it is repaid before 5 years.

Department of labor employment and training administration : Use the Department of Labor's Employment and Training Administration website and find the area on Registered Apprenticeship.

What is the basis in new building : The business receives insurance proceeds of $600,000 and reinvests $750,000 in a new building (qualifying property) within the replacement period.

What are the monthly payments : You borrowed $40,000 to go to school. The bank agreed that you could repay the loan by making 180 equal monthly payments, starting 12 months from now.

Factors that contribute to an organizational culture : What are the factors that contribute to an organizational culture that supports making decisions at the lowest level possible and empowerment?

User Account

All Pages