Problem 25-7 (LG 25-4) Assume an Fl originates a pool of short-term real estate loans worth $39 million with maturities of five years and paying interest rates of 7 percent (paid annually). The loans are amortized. a. What is the average payment received by the FI (both principal and interest) if no prepayment is expected over the life of the loans? b. If the loans are converted into real estate certificates and the Fl charges a 150 basis points servicing fee (including insurance), what are the payments expected by the holders of the securities, if no prepayment is expected? (For all requirements, enter your answers in dollars not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount.) × Answer is complete but not entirely correct. Average payment $ 9,511,737 b. Average payment $ 9,369,061 (X)
Problem 25-7 (LG 25-4) Assume an Fl originates a pool of short-term real estate loans worth $39 million with maturities of five years and paying interest rates of 7 percent (paid annually). The loans are amortized. a. What is the average payment received by the FI (both principal and interest) if no prepayment is expected over the life of the loans? b. If the loans are converted into real estate certificates and the Fl charges a 150 basis points servicing fee (including insurance), what are the payments expected by the holders of the securities, if no prepayment is expected? (For all requirements, enter your answers in dollars not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount.) × Answer is complete but not entirely correct. Average payment $ 9,511,737 b. Average payment $ 9,369,061 (X)
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:Problem 25-7 (LG 25-4)
Assume an Fl originates a pool of short-term real estate loans worth $39 million with maturities of five years and paying interest rates
of 7 percent (paid annually). The loans are amortized.
a. What is the average payment received by the FI (both principal and interest) if no prepayment is expected over the life of the loans?
b. If the loans are converted into real estate certificates and the Fl charges a 150 basis points servicing fee (including insurance), what
are the payments expected by the holders of the securities, if no prepayment is expected?
(For all requirements, enter your answers in dollars not in millions. Do not round intermediate calculations. Round your answers to
the nearest dollar amount.)
× Answer is complete but not entirely correct.
Average payment
$
9,511,737
b.
Average payment
$
9,369,061 (X)
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