Final answer:
The borrower's original interest rate was 5 1/4 percent, and after refinancing at a rate 3/8 percent lower, the new interest rate is 4 7/8 percent.
Step-by-step explanation:
The borrower had an original interest rate of 5 1/4 percent. If this rate is lowered by 3/8 percent through refinancing, we need to perform a subtraction to get the new interest rate. First, convert both percentages to improper fractions. 5 1/4 percent becomes 21/4 percent, and 3/8 percent remains as it is, since both are already expressed in eighths. Subtract the fractions: (21/4 - 3/8) percent.
It is necessary to convert 21/4 to eighths, which makes it 42/8. Now subtract the fractions: (42/8 - 3/8) becomes 39/8, which is equal to 4 7/8 percent. Therefore, after refinancing, the new interest rate is 4 7/8 percent.