Consider a 25-year, $200,000 mortgage with a rate of 6.6 percent. Three years into the mortgage, rates have fallen to 5.

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answerhappygod
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Consider a 25-year, $200,000 mortgage with a rate of 6.6 percent. Three years into the mortgage, rates have fallen to 5.

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Consider a 25-year, $200,000 mortgage with a rate of 6.6percent. Three years into the mortgage, rates have fallen to 5.3percent. Suppose the transaction cost of obtaining a new mortgageis $2,200.
a. Should the homeowner refinance at thelower rate?
multiple choice
Yes
No
b. Quantify the effect of the homeowner'sdecision. (Do not round intermediate calculations.Round your answer to 2 decimal places.)
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