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set with a 5% annual payment cap. On the reset date, the composite rate is 6% (at the end of year 2). Assume that the loan allows for negative amortization. What would be the outstanding balance on the loan at the end of Year 3?

set with a 5% annual payment cap. On the reset date, the composite rate is 6% (at the end of year 2). Assume that the loan allows for negative amortization. What would be the outstanding balance on the loan at the end of Year 3?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me to solve these question correct with good presentation using commas and dollar sign in each figure


 

 

A borrower takes out a 30-year adjustable-rate mortgage loan for $393,000 with monthly payments. The first two years of the loan have a "teaser" rate of 4%, after that, the rate can reset with a 5% annual payment cap. On the reset date, the composite rate is 6% (at the end of year 2). Assume that the loan allows for negative amortization. What would be the outstanding balance on the loan at the end of Year 3?

 
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