What is the return on investment if the borrower expects to remain in the home

A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments.  Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%.  However, the up front fees, which will be paid in cash, are $2,500.  What is the return on investment if the borrower expects to remain in the home for the next fifteen years?
(A)   6.00%
(B)   7.00%
(C)   13.00%
(D)   22.62%
(E)   28.89%


Mr. Tramp made a mortgage 5 years ago for $85,000 at 8.25% interest and a 15 year term.  Rates have now risen to 10% for an equivalent loan.  Mr. Tramp’s lender is willing to discount the loan by $2,000 if he will prepay the loan.  What rate of return would Mr. Tramp receive by prepaying the loan?
(A)   10.24%
(B)   8.95%
(C)   14.32%
(D)   9.14%

When calculating the cash equivalent value of an assumable loan, you find the present value of the payments using the:

(A)   Contract interest rate
(B)   Incremental borrowing cost
(C)   Market interest rate
(D)   Discount rate