Essay
You have just obtained a $150,000 10-year 6% fixed-rate mortgage.The mortgage is amortized over 25 years.The interest rate is compounded semi-annually and you make monthly payments at the end of each month.
Immediately after you signed the paperwork, mortgage rates dropped to 5%.Your bank has offered you the opportunity to renegotiate the mortgage for a penalty of $10,000.Should you take this opportunity? Assume your opportunity cost equals the mortgage rate.
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