Assume that the mortgage is a 20-year adjustable rate mortgage. a) Use the table to find the monthly mortgage paymen b) Make a rough estimate of your monthly payments for year 3 by recalculating the monthly payments for a 20-year mortgage for the original amount at the new interest rate. P= $141,000; beginning interest rate, 8%; rate increases 3% then 1% 5 Click the icon to view a table of monthly payments on a $1,000 loan.
Assume that the mortgage is a 20-year adjustable rate mortgage. a) Use the table to find the monthly mortgage paymen b) Make a rough estimate of your monthly payments for year 3 by recalculating the monthly payments for a 20-year mortgage for the original amount at the new interest rate. P= $141,000; beginning interest rate, 8%; rate increases 3% then 1% 5 Click the icon to view a table of monthly payments on a $1,000 loan.
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:### Adjustable Rate Mortgage Calculation
Assume that the mortgage is a 20-year adjustable rate mortgage. Use the table below to find the monthly mortgage payments. Make a rough estimate of your monthly payments for year 3 by recalculating the monthly payments for a 20-year mortgage for the original amount at the new interest rate.
- **Principal (P)**: $141,000
- **Beginning interest rate**: 8%
- **Rate increases**: 3% then 1%
Click the icon to view a table of monthly payments on a $1,000 loan.
#### Steps
a. The monthly payments for this loan are $____.
*Type an integer or a decimal.*
b. A rough estimated monthly payment for year 3 is $____.
*Type an integer or a decimal.*
#### Table 5: Monthly Payment on a $1,000 Loan
| Annual Interest Rate | Number of Years for the Loan |
|----------------------|-----------------------------|
| | 3 Years | 4 Years | 10 Years | 20 Years | 30 Years |
| **4%** | $29.53 | $22.58 | $10.12 | $6.06 | $4.77 |
| **5%** | 29.97 | 23.03 | 10.61 | 6.60 | 5.37 |
| **6%** | 30.42 | 23.49 | 11.10 | 7.16 | 6.00 |
| **8%** | 31.34 | 24.41 | 12.13 | 8.36 | 7.34 |
| **10%** | 32.27 | 25.36 | 13.22 | 9.65 | 8.78 |
| **12%** | 33.21 | 26.33 | 14.35 | 11.01 | 10.29 |
This table shows the monthly payment amounts for a $1,000 loan for various interest rates and terms as specified.
**Example Calculation:**
1. **Determine initial monthly payment:**
- Locate 8% interest rate for a 20-year loan in
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