You took out a $200,000 mortgage for 30 years. The contract rate is tied to the one-year U.S. treasury rate (index rate). The fixed risk premium for your mortgage is 9%. Your interest rate will be adjusted every year. For the first year, the index rate is 1.5%. What is the outstanding principal at the end of year 1? $95,758 $198,999 $197,769 $96,726

You took out a $200,000 mortgage for 30 years. The contract rate is tied to the one-year U.S. treasury rate (index rate). The fixed risk premium for your mortgage is 9%. Your interest rate will be adjusted every year. For the first year, the index rate is 1.5%. What is the outstanding principal at the end of year 1? $95,758 $198,999 $197,769 $96,726

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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You have decided to refinance your mortgage. You plan to borrow whatever is outstanding on your current mortgage. The current monthly payment is $1,955 and you have made every payment on time. The original term of the mortgage was 30 years, and the mortgage is exactly four years and eight months old. You have just made your monthly payment. The mortgage interest rate is 5.869% (APR). How much do you owe on the mortgage today?
A borrower takes out a 24-year adjustable rate mortgage loan for $253114 with monthly payments. The first two years of the loan have a "teaser" rate of 4%; after that, the rate can reset with a 2% annual rate cap. On the reset date, the composite rate is 5%. What would the Year 3 monthly payment be?
Amortization, Loan & InflationSuppose you take out a $100,000, 20- year mortgage loan to purchase a condo. The interest rate is 6%. Assume you make payments on the loan annually at the end of each year.a. What fraction of the initial loan payment is interest?b. What fraction of the initial loan is amortized? c. If the inflation rate is 2%, what are the real values of the first& last (year-end) payments?
A floating rate mortgage loan is made for $100,000 for 30yrs at a start rate of 12% interest. The parties have agreed to an $800 payment monthly. What is the loan balance at end of year 1? What if the interest rate increases to 13% at the end of year 1? How much intrest will be accrued from negative amortization in year one if the payment remains at $800? Year 5?
A floating rate mortgage loan is made for $155,000 for a 30 -year perlod at an Initial rate of 12 percent interest. However, the borrower and lender have negotlated a monthly payment of $1,240. 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 $1,240 ?
A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $800. What will be the loan balance at the end of year 1?
20. $1,000 is deposited each month in an account paying 4.23% for 15 years. Then, $350 is deposited in a different account with the same yield for 45 years. How much will be in the account of each account? What is the interest accrued over both accounts? 21. How large, can a 30-year mortgage can be afforded if the interest rate is 5.12% with monthly payments of $1,500? Calculate the mortgages differences if the interest rate increases to the following: (a) 6.25% (b) 7.25% (c) 8.25%
You are considering two payment options on a $500,000 20-year mortgage having an interest rate of 2.8% compounded monthly. The first option is to make monthly payments at the start of each month, while the second option is to make payments at the end of each month. How much interest will be saved by choosing the first option? Ⓒa. $1,521.60 O b. $1,721.60 O c. $1,921.60 O d. $2,121.60 Oe. $2,321.60 Clear my choice
G.I loan over 30 years has an annual nominal interest rate of 3.8% paid quarterly. What is the effective interest rate on the mortgage? 16. A serial loan of euro 3,000,000 with an annual interest rate of 3.2% must be repaid semi-annually over 25 years. What is the installment and interest rate in the second half of year 5? Both amounts must be displayed
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?
1 The house price is $475,000. The mortgage term is 15 years. Calculate your monthly payment if you get a mortgage with a 20% down payment at a 15-year fixed annual rate of 5%. Assume no compounding during the year. 2 Suppose you invest $3,845 at 7% simple annual rate (APR) for 5 years. a) Calculate the future value if interest is paid every quarter. b) Calculate the effective yearly interest rate in question a).
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