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

question 6

Multiple Choice

Considering the following information,what is the NPV if the borrower refinances the loan? Expected holding period: 15 years,Current loan balance: $100,000,Current loan interest: 9 %,New loan interest: 7.5 %,Cost of refinancing: $4,250

• A)-$5,003
• B)-$1,014
• C)$5,163
• D)$9,413

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Definitions:

Marginal Revenue

The extra revenue a company earns by selling an additional unit of a product or service.

Competitive Market

A market structure characterized by many buyers and sellers where no single entity can dictate or significantly alter the market price.

Competitive Market

A marketplace setup where there are numerous buyers and sellers, ensuring that no single participant has the power to control prices or the state of the market.

Average Total Costs

The total cost of production (fixed plus variable costs) divided by the quantity of output produced.