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Name: I have an NOI of$172,400. The lender indicated that I can borrow funds
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Description: I have an NOI of$172,400. The lender indicated that I can borrow funds at a 7.0% interest rate with a 25 year amortization and 5 year term at a 1.20 Debt Service Ratio(DCR). The lender will charge 2 points.a. What is the monthly payment?b. What is th

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What is the monthly payment? b. What is the APR (annual percentage rate) if fully amortized? C. What is the APR at the end of the loan term?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Completing the Accounting cycle

An accounting cycle is a multiple-step process that analyzes, verify, record and summarize the entities financial data. The accounting cycle starts when the transaction occurs between two parties and ends when the transaction is completed. The accounting cycle changes the entity's financial position as it involves identifying, verifying, and recording the financial transaction in chronological order. Financial position is the summary of business transactions that occurred throughout the particular accounting period. The accounting cycle recurs at the beginning of each financial year.

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Question

I have an NOI of$172,400. The lender indicated that I can borrow funds at a 7.0% interest rate with a 25 year amortization and 5 year term at a 1.20 Debt Service Ratio(DCR). The lender will charge 2 points.

a. What is the monthly payment?

b. What is the APR (annual percentage rate) if fully amortized?

C. What is the APR at the end of the loan term?

d. What if I pay the loan off at the end of the second year, what is my APR?

e. What if there was a prepayment penalty of 1.5% at the end of year 4, what is my
APR?

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