A floating rate mortgage loan is made for $180,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,440. 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 $1,440? Complete this question by entering your answers in the tabs below. Required A Required 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 $1,440? Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Loan balance in year 2

A floating rate mortgage loan is made for $180,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,440. 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 $1,440? Complete this question by entering your answers in the tabs below. Required A Required 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 $1,440? Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Loan balance in year 2

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 borrower takes out a 15-year loan for $65000 with equal end-of-month payments. The annual nominal interest rate of the loan is 12% convertible monthly. Immediately after the 60th payment is made, the remaining loan balance is reamortized. The maturity date of the loan remains unchanged, but the annual nominal interest rate of the loan is changed to 6% convertible monthly. Calculate the new endof-month payment.
A floating rate mortgage loan is made for $155,000 for a 30 -year perlod at an Initial rate of 12 percent interest. However, the borrower and lender have negotlated a monthly payment of $1,240. 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 $1,240 ?
A mortgage loan having a face value of \$ \\$ 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 .
A $50,000 mortgage loan requires monthly payments of $520 for 20 years. What is the semiannually compounded nominal rate of interest on the loan?A. 11.3752%B. 11.6987%C. 11.1146%D. 0.9381%E. 11.2573%
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
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?
You plan to borrow $43,100 at an 8.0% 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? a. $3,110.63 b. $3,061.57 c. $7,665.11 d. $8,278.32 e. $3,448.00
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

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