What is the payment on the old loan

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Question 1: For a standard, fully amortizing mortgage loan of $250,000 at 4 percent interest for 30 year balance at the end of 5 years. If the borrower refinances the loan, how much would need to be end of 20 years?

Question 2: Five years ago you borrowed $100,000 to finance the purchase of a $120,000 house. The interest rate on the old mortgage is 10%. Payment terms are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance at 8% with monthly payments for 30 years. The new lender will charge two discount points on the loan. Other refinancing costs will equal $3,000. There are no prepayment penalties associated with either loan. You feel the appropriate opportunity cost to apply to this refinancing decision is 8%.

a. What is the payment on the old loan?
b. What is the current loan balance on the old loan (five years after origination)?
c. What should be the monthly payment on the new loan?
d. Should you refinance today if the new loan is expected to be outstanding for five years?

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This paper has been prepared in word document. Ideally It is prepared in spreadsheet but since clients requirement was to explain step by step we have prepared in word. It deals with financial management. It explains in detailed how present value are computed.

Reference no: EM131496574

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len1496574

5/15/2017 8:52:53 AM

I need to know how to get the number. What to put in the financial calculator, these are exam questions and I won''''t have excel, so show me working out. 1 question is in the picture I have attached , It pictures part of the question , and I need you to figure out what the rest is and solve it and show me working out.

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