She currently owes $131,600 on an original $136,193 15-year FRM loan that she originated 2years ago at 4.375%. Unlike earlier assignments, you are responsible to use your ownknowledge of Excel to build spreadsheets to answer each of the questions listed below. Inorder to help facilitate grading, please download the Excel file listed on Blackboard and placeyour answers to the listed questions in the space provided on the first worksheet of that file.Questions:1. Your aunt has already received several loan quotes from different banks. Determine themonthly payment and effective borrowing cost for each loan below by creating a separateworksheet for each $131,600 loan given she prepays after 8 years (96 months):a. 30-year FRM loan at 3.624% with $2,367 in origination feesb. 30-year FRM loan at 3.75% with $1,617 in origination feesc. 15-year FRM loan at 2.88% with $1,859 in orig. fees and a 2% prepayment penaltyapplied towards any principal repaid beyond that is scheduled.d. 30-year 5/1 Hybrid ARM with an initial interest rate of 2.75% and $2,193 inorigination fees. After the 60th payment, you assume the interest rate willimmediately increase to 6.75% for the remaining payments.2. Each lender has offered to ‘roll-in’ any origination fees to the loan’s principal, but requiresthe loan-to-value (LTV) to be less than or equal to 80% at origination. Calculate the requiredappraised value of the property assuming she does and does not “roll-in” the origination feesfor each loan option.3. What is the net present value (NPV) of the refinance decision if she chooses loan Option B,prepays after 8 years, does not roll-in fees, and has a monthly discount rate of 0.1%?4. Your aunt currently earns $64,000 per year and pays $741 and $259 per year in propertytaxes and hazard insurance, respectively. Given that the lender requires that her monthlydebt-to-income ratio must be less than 45%, what is maximum size of loan she can obtain ifshe chooses loan option A?
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