You just closed a new loan on his 10-unit apartment as follows: Initial loan amount, $2,000,000, 5.5% interest, 10-year term, 30-year amortization, and there was a 2% loan fee paid at closing. a) What is the monthly payment? b) What are the net loan proceeds? c) What will the loan balance be by when the loan matures? d) What is the balance at the end of year 5? e) What is the effective annual interest rate if Garret holds the note until maturity? What if he pays it off at the end of year 5?

You just closed a new loan on his 10-unit apartment as follows: Initial loan amount, $2,000,000, 5.5% interest, 10-year term, 30-year amortization, and there was a 2% loan fee paid at closing. a) What is the monthly payment? b) What are the net loan proceeds? c) What will the loan balance be by when the loan matures? d) What is the balance at the end of year 5? e) What is the effective annual interest rate if Garret holds the note until maturity? What if he pays it off at the end of year 5?

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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