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what would be the payment adjustments and loan balances for years 3 to 5

what would be the payment adjustments and loan balances for years 3 to 5

Essentials Of Investments
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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Following the calculation for years 1 and 2, what would be the payment adjustments and loan balances for years 3 to 5? See attached.

● ● ARM Payment Mechanics: No Caps or Limitations (1) Year 1 2 3 4 5 *Initial rate. *Rounded. (2) Index 2% 3 4 2 (3) Margin 2% 2 2 2 Ⓒ2022 McGraw Hill Education. (4) Interest Rate 3%* 4 5 6 4 (5) Payments $252.96 285.50 319.14 353.69 288.03 (6) Balance* $58,748 57,651 56,682 55,815 54,569 For year 1: PV=60,000, N=30*12=360, I/Y=3/12, FV=0, CPT PMT=- 252.96 Balance at the end of year 1: PV=60,000, N=12, I/Y=3/12, PMT=- 252.96, CPT FV=-58,748 For year 2: PV=58,747, N=29*12=348, I/Y=4/12, FV=0, CPT PMT=- 285.50 Balance at the end of year 2: PV=58,748, N=12, I/Y=4/12, PMT=- 285.50, CPT FV=-57,651
Transcribed Image Text:● ● ARM Payment Mechanics: No Caps or Limitations (1) Year 1 2 3 4 5 *Initial rate. *Rounded. (2) Index 2% 3 4 2 (3) Margin 2% 2 2 2 Ⓒ2022 McGraw Hill Education. (4) Interest Rate 3%* 4 5 6 4 (5) Payments $252.96 285.50 319.14 353.69 288.03 (6) Balance* $58,748 57,651 56,682 55,815 54,569 For year 1: PV=60,000, N=30*12=360, I/Y=3/12, FV=0, CPT PMT=- 252.96 Balance at the end of year 1: PV=60,000, N=12, I/Y=3/12, PMT=- 252.96, CPT FV=-58,748 For year 2: PV=58,747, N=29*12=348, I/Y=4/12, FV=0, CPT PMT=- 285.50 Balance at the end of year 2: PV=58,748, N=12, I/Y=4/12, PMT=- 285.50, CPT FV=-57,651
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