Find the BEY of each alternative

[
C ommercial P apers → Price=4,000,000∗ 1−0.0365∗ ( 360
60
)]=3,975,667
→[(4,000,000/3,975,667)– 1]∗(365 /60)=3.7233 % Bond Equivalent Yield(BEY )
0.0366∗365
C D → BEY = =3.7108 Bond Equivalent Yield(BEY )
360
Therefore, The best deal is the CP and the opportunity cost is 3.7233%
Hedge by selling Canadian Dollars forward, and the current Canadian Dollars amount is
110,000,000.
¿ one year ,the loans will be worth 110,000,000 x 1.08=118,800,000Canadian dollars .
Selling this amount forward (118,800,000
C $ 1.14 )
=104,210,526 US dollars .

¿ return ,this gives us a rate return of

[ ]
104,210,526
100,000,000
−1=4.211%

The cost rate is 4%, hence, the spread would look like 5.404% -4% = 1.404%
The average ROR is 2/3 of 6% added to a third of 4.211% giving us = 5.404%
Cost of the house=250,000Downpayment =250,000 x 20 %=50,000
Mortgage=250,000−50,000=200,000Points financed =200,000 x 0.03=6,000
Total Loan Amount=200,000+6 ,000=206,000
PV = 206,000
N = 30 x 12 months = 360
I/Y = 6.5% / 12 months = 0.54167
FV = 0
Compute PMT = 1,302.06

Passing 5 years, your N would be now 300 derived from [(30-5) x 12 = 300]
Compute PV, which also represents your remaining loan balance = 192,838.61
For the new loan, the existing loan amount would still be 192,838.61
Total costs of refinancing would be 192,838.61 * 3.5% = 6,749.35
PV = 192,838.61
N = 30 x 12 months = 360
I/Y = 5% / 12 months = 0.41667
FV = 0
Compute PMT = 1,035.20
Total Amount Saved in Payments = Total payments from remaining on Old Mortgage –
Payments on new Mortgage
 1,302.06 * 300 – 1,035.20 * 360 = 17,946.26
 Therefore, given that the amount you save is more than the cost of refinancing, you
should consider to refinance.