Instructions: 1. Open the worksheet you created for Assignment #1 and then "copy and paste" an amortization table (e.g., 30-year FRM) you created for that assignment into the current assignment. The easiest way to copy the worksheet into a new file is to open the worksheet you wish to copy and then right-click the bottom tab and then selecting 'move or copy' and then selecting the new file (you can also try 'copy and paste'). 2. Calculate the borrower's effective borrowing cost of a loan based on the number of months until the borrower prepays the loan. which you assume they do at the end of the month. 3. Answer the questions below based on comparing two different loan options using the worksheets you created for the assignment. Option A is 15-year $235,000 fixed rate mortgage loan offered at 5.1% with $3,000 of origination fees. Option B is a 15-year $235,000 fixed- rate mortgage loan offered at 4.4% with $9,000 of origination fees. 4. What is the APR of each Loan Option if the Borrower plans to Prepay after 2 years? 5. What is the APR of each Loan Option if the Borrower plans to Prepay after 10 years? 6. What loan option should a borrower select if they plan to prepay after 36 months? Why?
Instructions: 1. Open the worksheet you created for Assignment #1 and then "copy and paste" an amortization table (e.g., 30-year FRM) you created for that assignment into the current assignment. The easiest way to copy the worksheet into a new file is to open the worksheet you wish to copy and then right-click the bottom tab and then selecting 'move or copy' and then selecting the new file (you can also try 'copy and paste'). 2. Calculate the borrower's effective borrowing cost of a loan based on the number of months until the borrower prepays the loan. which you assume they do at the end of the month. 3. Answer the questions below based on comparing two different loan options using the worksheets you created for the assignment. Option A is 15-year $235,000 fixed rate mortgage loan offered at 5.1% with $3,000 of origination fees. Option B is a 15-year $235,000 fixed- rate mortgage loan offered at 4.4% with $9,000 of origination fees. 4. What is the APR of each Loan Option if the Borrower plans to Prepay after 2 years? 5. What is the APR of each Loan Option if the Borrower plans to Prepay after 10 years? 6. What loan option should a borrower select if they plan to prepay after 36 months? Why?
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
Related questions
Question
Transcribed Image Text:Instructions:
1. Open the worksheet you created for Assignment #1 and then "copy and paste" an amortization
table (e.g., 30-year FRM) you created for that assignment into the current assignment. The
easiest way to copy the worksheet into a new file is to open the worksheet you wish to copy
and then right-click the bottom tab and then selecting 'move or copy' and then selecting the
new file (you can also try 'copy and paste').
2. Calculate the borrower's effective borrowing cost of a loan based on the number of months
until the borrower prepays the loan. which you assume they do at the end of the month.
3. Answer the questions below based on comparing two different loan options using the
worksheets you created for the assignment. Option A is 15-year $235,000 fixed rate mortgage
loan offered at 5.1% with $3,000 of origination fees. Option B is a 15-year $235,000 fixed-
rate mortgage loan offered at 4.4% with $9,000 of origination fees.
4. What is the APR of each Loan Option if the Borrower plans to Prepay after 2 years?
5. What is the APR of each Loan Option if the Borrower plans to Prepay after 10 years?
6. What loan option should a borrower select if they plan to prepay after 36 months? Why?
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