3. A fully amortizing mortgage is made for $100,000 at 6.5% interest. If the monthly payments are $1000 per month, then when will the loan be repaid? 4. A partially amortizing mortgage loan is made for $60,000 for a term of 10 years. The borrower and lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that time. a. If the interest rate is 7%, what must monthly payments be over the 10 year term? b. If the borrower chooses to repay the loan after five years instead of at the end of year 10, then what will the loan balance be at the end of year 5? 5. A fully amortizing CAM loan is made for $125,000 at 11 percent interest for 20 years. a. What will be the monthly payments and remaining loan balances for the first six months? b. What would monthly payments be if the loan were CPM instead? C. If both loans (the CAM and CPM) are repaid at the end of year 5, would the lender earn
3. A fully amortizing mortgage is made for $100,000 at 6.5% interest. If the monthly payments are $1000 per month, then when will the loan be repaid? 4. A partially amortizing mortgage loan is made for $60,000 for a term of 10 years. The borrower and lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that time. a. If the interest rate is 7%, what must monthly payments be over the 10 year term? b. If the borrower chooses to repay the loan after five years instead of at the end of year 10, then what will the loan balance be at the end of year 5? 5. A fully amortizing CAM loan is made for $125,000 at 11 percent interest for 20 years. a. What will be the monthly payments and remaining loan balances for the first six months? b. What would monthly payments be if the loan were CPM instead? C. If both loans (the CAM and CPM) are repaid at the end of year 5, would the lender earn
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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3. A fully amortizing mortgage is made for $100,000 at 6.5% interest. If the monthly payments are
$1000 per month, then when will the loan be repaid?
4. A partially amortizing mortgage loan is made for $60,000 for a term of 10 years. The borrower
and lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that
a. If the interest rate is 7%, what must monthly payments be over the 10 year term?
b.
If the borrower chooses to repay the loan after five years instead of at the end of year
10, then what will the loan balance be at the end of year 5?
5. A fully amortizing CAM loan is made for $125,000 at 11 percent interest for 20 years.
a. What will be the monthly payments and remaining loan balances for the first six
months?
b.
c.
What would monthly payments be if the loan were CPM instead?
If both loans (the CAM and CPM) are repaid at the end of year 5, would the lender earn
a higher rate of interest on either loan? Which one and why? Use Excel.
6. A $100,000 CPM fully amortizing loan is made, at a 3% interest rate compounded monthly, for a
15 year term. Loan comes with a charge of 3 points. What is the effective annual rate on the
loan?
W
Focus
50
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