A floating rate mortgage loan is made for $12 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $960. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 1 and year 5 if the payment remains at $960?

A floating rate mortgage loan is made for $12 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $960. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 1 and year 5 if the payment remains at $960?

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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A mortgage loan having a face value of \$ \\$ 265,000 \$ is arranged by a mortgage broker. From this face value, the broker deducted a fee of \$ \\$ 4,000 \$. The mortgage is written at a contract rate of \$ 3.2 \\% \$ compounded semiannually for a twenty-five year term, with monthly payments. What is the annual cost of borrowing, including the brokerage fee, expressed as an effective interest rate? \$ 3.00 \\% \$ \$ 3.37 \\% \$ \$ 3.73 \\% \$ \$ 4.15 \\% \$ \$ 4.09 \\% \$
A borrower has two alternatives for a loan: (1) issue a $300,000, 120-day, 8% note or (2) issue a $300,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option.$ for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $300,000, 120-day, 8% interest-bearing note $ (2) $300,000, 120-day note discounted at 8% $ c. Alternative is more favorable to the borrower because the borrower .
Need Detailed answer with steps please 30. Considering the following information, what is the NPV if the borrower refinances the loan? Expected holding period: 3 years, Current loan balance: $100,000; Current loan interest: 7%; Current loan mortgage payment: $898.33; Remaining term on current mortgage: 15 years; New loan interest: 5.5%; New loan mortgage payment: $817.08; New loan term: 15 years; Cost of refinancing: $5,000. Assume that the opportunity cost is the interest rate on the new loan (5.5%). A. -$5,000.00 B. -$1,155.27 C. $3,844.73 D. $8,844.73
A$66.000interest-only mortgage loan is made for 30 years at a nominal interest rate of 8 percent. Interest is to be accrued daily, but payments are to be made monthly. Assume 30 days each month. Required: a. What will the monthly payments be on such a loan? b. What will the loan balance be at the end of 30 years? c. What is the effective annual, rate on this loan?
A floating rate mortgage loan is made for $185,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,480. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,480?
A floating rate mortgage loan is made for $170,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,360. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,360? Complete this question by entering your answers in the tabs below. Required A Required B What will be the loan balance at the end of year 1? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Loan balance
You plan to borrow $37,200 at a 7.2% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? O a. $2,678.40 O b. $2,370.79 O c. $2,404.40 O d. $6,950.78 Oe. $6,483.94
Consider a 30-year, 6% loan for $240,000 with fixed monthly payments. a) What will be the remaining mortgage balance after the first 6 years? b) How much of interest is to be paid over the first 6 years? c) How much of principal reduction is to take place over the first 6 years?
Consider a loan of $7700 at 6.8% compounded semiannually, with 18 semiannual payments. Find the following. (a) the payment necessary to amortize the loan (b) the total payments and the total amount of interest paid based on the calculated semiannual payments (c) the total payments and total amount of interest paid based upon an amortization table. (a) The semiannual payment needed to amortize this loan is $ (Round to the nearest cent as needed.) (b) The total amount of the payments is $ (Round to the nearest cent as needed.) The total amount of interest paid is $. (Round to the nearest cent as needed.) (c) The total payment for this loan from the amortization table is $ (Round to the nearest cent as needed.) The total interest from the amortization table is $ (Round to the nearest cent as needed.)
You have a 35-year loan that is being paid in installments of 2,000 at the end of each year at an effective annual rate of 6%. Immediately after the 29th installment, the loan is renegotiated by keeping the period of the loan and the interest unchanged but the payments will change from now on to be 1700, 1700 + x, 1700 + 2x, . . . , 1700 + 5x. Find x
Problem: Please answer the following questions regarding a $300,000 Mortgage Loan with monthly amortization over 30 years and an annual interest rate of 6%. What is the loan payment for a (30 year loan (360 monthly payments) of $300,000 at 6%? Question Answer What is the monthly payment amount? Loan Monthly Payment: How much interest and how much is principle on the first payment? Interest: Principle: How much interest and how much is principle on the second payment? Interest: Principle: If after the second payment an addition $10,000 was paid on principle. How much would the interest be on the third payment? Interest:
A fully amortizing mortgage loan is made for $100,000 for 15 years. The interest rate is 6 percent per year compounding monthly. Payments are to be made monthly. What is the loan outstanding after one monthly payment? (Round to a dollar) $89,692 $89,380 $99,656 $89,691 $79,725

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