Your mortgage is an ARM with a 1 year adjustment interval, 4% margin, and a 2% periodic cap. Your initial APR on this loan was 4.5%. Over the last 5 years the market rates of interest have risen dramatically. The current interest rate index for your loan is 8.5 %. What APR are your monthly payments being calculated on today? 12.5% O 10.5% O 8.5% 4.5%

Your mortgage is an ARM with a 1 year adjustment interval, 4% margin, and a 2% periodic cap. Your initial APR on this loan was 4.5%. Over the last 5 years the market rates of interest have risen dramatically. The current interest rate index for your loan is 8.5 %. What APR are your monthly payments being calculated on today? 12.5% O 10.5% O 8.5% 4.5%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose that four years ago you took out a Canadian mortgage for $683,000at an APR of 3.37% with monthly payments to be amortized over 25 years. You have been paying$3363.32 per month. Today, you have the opportunity to refinance your mortgage at 1.98% for your monthly payments for the remaining 21 years. (a) Calculate the e§ective monthly interest rate and the remaining balance of the loan outstanding when 21 years remain to the loan. (b) Find the new e§ective monthly interest rate if you decide to refinance at 1.98%. How much would your new monthly payment be?
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
n adjustable-rate mortgage resets every year. For the first year, the index rate is 3.3% and the margin is 2.9%. The loan is for $200,000 and has a term of 30 years. What is the required monthly payment (principal and interest) for the first year? 1,426.88 1,708.37 1,224.94 875.9 832.46
A 30 year mortgage for $100,000 has been issued. The interet rate is 10% and payments are made anually. If your time value of money is 12%, what is the PW of the payments in Year-1 dollars if inflation is 0%, 3%, 6%, 9%?
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What size loan must we take today with a 14% compound interest rate to have end-of-year payments of $1400, $1320, $1240, $1160, and $1080 for the next five years, respectively? In other words, if you take out a loan today, and after making all five payments, above, the loan is paid off, what is the value of that loan? Answer:
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You have been assigned to estimate the interest rates that your company may have to pay when borrowing money in the near future. The following information is available.kPR = 2%MR = 0.1% for a 1 year loan increasing by 0.1% for each additional yearLR = 0.05% for a 1 year loan increasing by 0.05% for each additional yearDR = 0 for a 1 year loan, 0.2% for a 2-year loan, increasing 0.1% for each additional yearExpected Inflation Rates Year 1 = 7% Year 2 = 5% Year 3 and thereafter = 3% a. Calculate the inflation adjustment (INFL) for a 5-year loan. b. Calculate the appropriate interest rate for a 5-year loan.
Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT? Exactly 8% of the first monthly payment represents interest. The monthly payments will decline over time. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity. The amount representing interest in the first payment would be higherif the nominal interest rate were 6% rather than 8%.