What is the effective rate of refinancing this


You borrowed $120,000 for 30 years at 6%. Thirteen years have gone by, and you realize that interest rates have fallen to 4.25%. You ask your bank about this, and they agree to give you that rate if you give them $4000 in refinance fees. They recommend that you borrow the money for only 17 years, because that was all that was left on your original loan. What is the effective rate of refinancing this debt? 5% 4.25% Correct Response 4.85% 6%. Please help and show work

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