Assume an elderly couple owns a $400,000 home that is free and clear of mortgage debt. A reverse annuity mortgage (RAM) lender has agreed to a $300,000 RAM. The loan term is 15 years, the contract is 5.25%, and payments will be made at the end of each month. What portion of the loan balance at the end of year 15 represents interest (rounded to thousands)? Excel O a) $95,000 O b) $102,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Assume an elderly couple owns a $400,000 home that is free and clear of mortgage
debt. A reverse annuity mortgage (RAM) lender has agreed to a $300,000 RAM. The
loan term is 15 years, the contract is 5.25%, and payments will be made at the end of
each month.
What portion of the loan balance at the end of year 15 represents interest (rounded
to thousands)?
Excel
a) $95,000
O b) $102,000
O c) $174,000
d) $198,000
e) $205,000
Transcribed Image Text:Assume an elderly couple owns a $400,000 home that is free and clear of mortgage debt. A reverse annuity mortgage (RAM) lender has agreed to a $300,000 RAM. The loan term is 15 years, the contract is 5.25%, and payments will be made at the end of each month. What portion of the loan balance at the end of year 15 represents interest (rounded to thousands)? Excel a) $95,000 O b) $102,000 O c) $174,000 d) $198,000 e) $205,000
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