Question

eBook A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their 25th payment, and the current balance on the loan is $208,555.87, Interest rates are at an all-time low, and Dave and Jana are thinking of refinancing to a n of-pocket costs of $2,937. The out-of-pocket costs must be paid in full at the time of refinancing Build a spreadsheet model to evaluate this offer. The Excel functión: ew 15-year faed loan. Their bank has made the folowing are: i5-year term, 3.0%, plus out PMT(rate, nper, pv, fv, type) calculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are rate the interest rate for the loan nper the total number of payments pv present value (the amount borrowed) v w future value [the desired cash balance after the last payment ( type " payment type (o - end of period, 1 eginning of the period) for example, for Dave and Jana's original loan, there wis be 180 peyments 12 15-180), so we would use PMTO 0549/12, 180, 230415,0,0)-$1,881.46 Note that because payments are made monthly, the annual interest rate must be expressed as a monthly rate. Also, for payment calculations, we assume that the payment is made at the end of the month. The savings from refinancing occur over time, and therefore need to be discounted back to current dollars. The formula for converting K deollars saved t months from now to current dollars is: where r is the monthly infiation rate. Assume that r o.002 and that Dave and Jana make their payment at the end of each month Use your model to calculate the savings in current dollars associated with the refinanced loan versus staying with the original loan If required, round your answer to the nearest whole dolar amount. If your answer is negative use "minus sin

Answer 1

Answer:

The output, after implementing above formulas, has been shown below: