A partially amortizing loan for $108,000 for 10 years is made at 6 percent interest. The lender and borrower agree that payments will be monthly and that a balance of $20,500 will remain and be repaid at the end of year 10. Required: a. Assuming 2 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10? b. What must the loan balance be if it is repaid after year 4? c. What will be the yield to the lender if the loan is repaid at the end of year 4? Note: For all requirements, do not round intermediate calculations, round your final answers to 2 decimal places. a. Annual yield b. Loan balance c. Annual yield % %
A partially amortizing loan for $108,000 for 10 years is made at 6 percent interest. The lender and borrower agree that payments will be monthly and that a balance of $20,500 will remain and be repaid at the end of year 10. Required: a. Assuming 2 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10? b. What must the loan balance be if it is repaid after year 4? c. What will be the yield to the lender if the loan is repaid at the end of year 4? Note: For all requirements, do not round intermediate calculations, round your final answers to 2 decimal places. a. Annual yield b. Loan balance c. Annual yield % %
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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Transcribed Image Text:A partially amortizing loan for $108,000 for 10 years is made at 6 percent interest. The lender and borrower agree that
payments will be monthly and that a balance of $20,500 will remain and be repaid at the end of year 10.
Required:
a. Assuming 2 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10?
b. What must the loan balance be if it is repaid after year 4?
c. What will be the yield to the lender if the loan is repaid at the end of year 4?
Note: For all requirements, do not round intermediate calculations, round your final answers to 2 decimal places.
a. Annual yield
b. Loan balance
c. Annual yield
%
%
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