What is the return on investment

Assignment Help Finance Basics
Reference no: EM132700967

A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $2,500. What is the return on investment if the borrower expects to remain in the home for the next fifteen years?

Reference no: EM132700967

Questions Cloud

Find impact on the capital budgeting decision : Sunk costs are cash outlays that may have a substantial impact on the capital budgeting decision and should be included in the initial investment calculation.
Determining the amount of the shareholders equity : A firm has common stock of $100, paid-in surplus of $370, total liabilities of $460, current assets of $490, and net fixed assets of $700.
Finding the cash flow to creditors : What was the cash flow to creditors during the year?
What is the effective annual rate of interest : What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan?
What is the return on investment : What is the return on investment if the borrower expects to remain in the home for the next fifteen years?
What is the incremental cost of borrowing : Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money?
Finding the amount of sale of the note : What is the amount Splish Brothers will receive on the sale of the note?
Write down self introduction overview : If you have not done so already, review the full Practice Speech 1: Self Introduction Overview (opens in a new window). This course is designed to help you.
What is the sharpe ratio of the best feasible cal : A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund

Reviews

Write a Review

Finance Basics Questions & Answers

  At what price should a share sell

The risk-free rate of return is 5%, the required rate of return on the market is 12%, and High-Flyer stock has a beta coefficient of 1.0.

  What types of information must be considered

What types of information must be considered when it comes to risk and return?

  Write out equation to solve for yield to maturity for bond

Write out the equation to solve for yield to maturity for this bond on the date of issue and then solve for the yield to maturity.

  Determining the portfolio return

If you have a portfolio made up of 30 percent Yum Brands, 20 percent Raytheon, and 50 percent Coca-Cola, what is your portfolio return?

  What is the ytm of the bond

The bond has a coupon rate of 6.93 percent and matures in 23 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?

  What is abc weighted average cost of capital

Problem: ABC Manufacturing's current capital structure is comprised of 35% debt and 65% equity (based on market values). Their current equity beta is 1.40. The company's bonds have a 7% annual coupon, 20-years to maturity, and currently trade at $..

  Calculate the default risk premium on nikki g

The maturity risk premium is 0.40 percent on 2-year securities and increases by 0.07 percent for each additional year to maturity. Calculate the default risk premium on Nikki G's 10-year bonds. (Round your answer to 2 decimal places.)

  Computing the net present value of the project

You are a consultant to a firm evaluating an expansion of its current business. The cash-flow forecasts (in millions of dollars) for the project are as follows.

  Valuing an annuity for gift tax purposes

Suppose that for valuing an annuity for gift tax purposes, the IRS currently requires a discount rate of APR = 12%, compounded quarterly.

  Diagnosing poor performance problems

Can subjectivity be removed completely? Discuss how you would go about diagnosing poor performance problems. Explain two factors to consider.

  Describing individual or organization investment objectives

The employee bears all of the risk in a defined contribution pension plan. Our text states that the two most important factors in describing an individual's or

  Direction and future of every company

Budgeting in uncertainty is challenging. The decisions made by budget managers affect the direction and future of every company. Having a thorough understanding of the components of capital budgeting is essential to developing an appropriate budge..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd