Homework Help is Here – Start Your Trial Now!
Business
Accounting
**Question 7** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. Tim anticipates the index to be 2.50% at the time of the 1st reset. If the index resets to 2.50% as Tim forecasts, what will his new mortgage payment be in year 4? ______ 9287.59 **Question 8** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. The index was 3% at the time of origination and remained at 1.5% during every rate reset. Tim has to pay 3 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term. ______

**Question 7** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. Tim anticipates the index to be 2.50% at the time of the 1st reset. If the index resets to 2.50% as Tim forecasts, what will his new mortgage payment be in year 4? ______ 9287.59 **Question 8** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. The index was 3% at the time of origination and remained at 1.5% during every rate reset. Tim has to pay 3 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term. ______

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Plz show all work for 8 and 7
**Question 7** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. Tim anticipates the index to be 2.50% at the time of the 1st reset. If the index resets to 2.50% as Tim forecasts, what will his new mortgage payment be in year 4? ______ 9287.59 **Question 8** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. The index was 3% at the time of origination and remained at 1.5% during every rate reset. Tim has to pay 3 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term. ______
Transcribed Image Text:**Question 7** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. Tim anticipates the index to be 2.50% at the time of the 1st reset. If the index resets to 2.50% as Tim forecasts, what will his new mortgage payment be in year 4? ______ 9287.59 **Question 8** Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30-year 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1-year CMT. There are no caps. The index was 3% at the time of origination and remained at 1.5% during every rate reset. Tim has to pay 3 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term. ______
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS