Ayoung couple (who you happen to be very close friends with) purchases a $250,000 house when they are 28 years old. they purchase the house by making a 15% down payment and taking out a 30-year mortgage at an annual interest rate of 7.75% compounded monthly to finance the rest. after 5 years, there is an unforeseen macro-economic event and mortgage rates fall to 3.5%.1 the young couple now has the opportunity to refinance their mortgage by taking out a new 25-year mortgage at 3.5% compounded monthly on their remaining unpaid balance, but they must pay a $2,500 penalty. a strategy outlining an alternative use of the money saved each month by refinancing and the potential value of this strategy to the couple when they retire at 65. specifically, suppose that the couple spends half of the money that refinancing saves each month as discretionary income aimed at improving their lifestyle and invests the other half in an account where interest is 7.25% compounded monthly.