Chapter 4, Problem 13P

a.

Summary Introduction

Calculate the amount lender actually disbursed.

b.

Summary Introduction

Calculate APR for the borrower assuming that the mortgage is paid after 30 years.

c.

Summary Introduction

Determine the effective interest rate if the loan is repaid in 5 years and the reason for the difference in rates, if loan is repaid in 5 years and 30 years’.

d.

Summary Introduction

Determine the effective interest rate if the loan is repaid after five years with the prepayment penalty.