Five years ago you borrowed $100000 to finance the purchase of a $120000 house. The interest rate on the old mortgage is 10%. Payment terms are being
made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance at 8% with monthly
payments for 30 years. The new lender will charge two discount points on the loan. Other refinancing costs will equal $3000. There are no prepayment
penalties associated with either loan. You feel the appropriate opportunity cost to apply to this refinancing decision is 8%.

a. What is the payment on the old loan?

b. What is the current loan balance on the old loan (five years after origination)?

c. What should be the monthly payment on the new loan?

d. Should you refinance today if the new loan is expected to be outstanding for five years?