Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. tom got a 30 year fully amortizing frm for $1,500,

Tom got a 30 year fully amortizing FRM for $1,500,000 at 6%, with constant monthly...

50.1K

Verified Solution

Question

Finance

Tom got a 30 year fully amortizing FRM for $1,500,000 at 6%, with constant monthly payments. After 3 years of payments, rates fall and he can get a 27 year FRM at 5%, but he must pay 2 points and $1000 in closing costs to get the new loan. Think of the refinancing decision as an investment for Tom, he pays a fee now but saves money in the future in the form of lower payments. What is the annualized IRR of refinancing for Tom assuming he pays through maturity?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

O 13 A tent is in the shape of a triangular prism About how much...

Physics
1.2K views

amplitude 2k 3 not perform SHM but will have a periodic motion 4 remain stationary...

Basic Math
1.2K views

5 1 66 points Check my work mode This shows what is correct or incorrect...

Basic Math
1.2K views

A fan of trigonometry is building a right triangular pool in his backyard. The hypotenuse...

Basic Math
1.2K views

Solve 3x 15 3 x 1 Part A What are the solutions to the equation...

Basic Math
1.2K views

Evaluate the expression P(12, 3), equivalently 12 P3Your answer is:

Accounting
1.2K views

Tech Supplies Company, Incorporated, is a leading retailer...

Accounting
1.2K views

a) A company expects a series of 24 monthly receipts of $3,600 each. The first...

Accounting
1.2K views

A company has established that the relationship between the sales price for one of its...

Accounting
1.2K views

Bed & Bath, a retailing company, has two departmentsHardware and Linens. The companys most recent...

Finance
1.2K views

the table shows your stock postions at the beginning of the year, the dividends that...

Finance
1.2K views

Exhibit 4.1 The balance sheet and income statement shown below are for Koski Inc. Note...