Using a $400,000, 30-year monthly payment Priced Level-Adjustable Mortgage, assuming the "real" loan rate is 5%, with inflation rates of 5%, 6%, and 7% for years 1, 2, and 3, respectively. It is assumed that adjustments are made annually in the outstanding balance. What is the unpaid mortgage at the beginning of the 4th year?

Using a $400,000, 30-year monthly payment Priced Level-Adjustable Mortgage, assuming the "real" loan rate is 5%, with inflation rates of 5%, 6%, and 7% for years 1, 2, and 3, respectively. It is assumed that adjustments are made annually in the outstanding balance. What is the unpaid mortgage at the beginning of the 4th year?

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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A floating rate mortgage loan is made for $185,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,480. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,480?
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N1. Account
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Consider a home mortgage of $125,000 at a fixed APR of 4.5% for 25 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. ..... a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.)

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