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Category > Business & Finance Posted 03 Jun 2017 My Price 11.00

1.Ten years ago, an organization

1.Ten years ago, an organization took out a $350,000 30-year mortgage with a 4.75% annual interest rate. Now, it is taking advantage of low interest rates to refinance the mortgage. The organization will pay $7,600 in up-front fees for a new 30-year mortgage with a 2.5% annual interest rate. The organization can earn an annual return of 2% on any money it saves.

 

a)The new mortgage will be $300,000Ac€??enough to pay off the old mortgage and buy some new furniture. Ignoring the up-front fees for now, how much will the organization save each month by refinancing? (Hint: Mortgage payments are monthly cash outflows.)

 

b)How many years will it take the organization to recover the up-front fees? (Hint: Treat the savings as a monthly cash inflow.)

 

c)How much money will the organization save in total (in todayAc€?cs dollars) over the next 20 years?

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Status NEW Posted 03 Jun 2017 11:06 AM My Price 11.00

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