Considering the Following Information, What Is the NPV If the Borrower

question 39

Multiple Choice

Considering the following information, what is the NPV if the borrower refinances the loan? Expected holding period: 3 years, Current loan balance: $100,000; Current loan interest: 7%; Current loan mortgage payment: $898.33; Remaining term on current mortgage: 15 years; New loan interest: 5.5%; New loan mortgage payment: $817.08; New loan term: 15 years; Cost of refinancing: $5,000. Assume that the opportunity cost is the interest rate on the new loan (5.5%) .

• A) -$5,000.00
• B) -$1,155.27
• C) $3,844.73
• D) $8,844.73

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