Question: a) A borrower secured a $600,000 loan for a term of 15 years. The loan is partially amortising with a balloon payment of $150,000 at

a) A borrower secured a $600,000 loan for a term of 15 years. The loan is partially amortising with a balloon payment of $150,000 at maturity. The loan requires monthly payments at an annual rate of 6.34%. Calculate the pay rate on this loan.

b) A homeowner obtained a fully amortising constant payment loan 4 years ago for $567,000 at an annual interest rate of 6.12% for a 24-year term and monthly payments. Since then, interest rates fell and a new loan can be secured at an annual rate of 5.32% for a term of 20 years. Suppose there is a 1.50% break fee on the existing loan. The break fee will be capitalised into the new loan (i.e. the new loan amount equals the loan amount required for refinancing and the break fee). What is the effective cost of refinancing, if the new loan is repaid after 5 years?

c) You have secured $1,210,000 in debt financing to purchase a rental property. The loan will have a term of 30 years and will require monthly payments at an annual interest rate of 3.89%. The lender has agreed for the loan to be interest-only during the first 5 years. After the interest-only period, the loan will convert to a fully amortising loan. If the loan is held to maturity, how much total interest would the lender receive during this term?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a To calculate the pay rate on the loan we need to determine the monthly payment amount Loan amount 600000 Loan term 15 years 15 12 180 months Balloon payment 150000 Annual interest rate 634 To calcul... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Question 23 4 pts Use the bears data to build a 90% confidence interval on the sample mean Head Length, if o is known to be 1.94 inches. Note: The sample size (n) is 143 bears. Round to three decimal...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Question: Old MathJax webview Old MathJax webview i need ans of these question but the source is alot Old MathJax webviewOld MathJax webview i need ans of these question but the source is alot these...

1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...

A borrower secured a $ 2 5 0 , 0 0 0 loan for a term of 1 5 years. The loan is partially amortising with a balloon payment of $ 1 0 0 , 0 0 0 at maturity. The loan requires monthly payments at an...

A borrower secured a $678,000 loan for a term of 20 years. The loan is partially amortising with a balloon payment of $225,000 at maturity. The loan requires monthly payments at an annual rate of...

a) You secured bank financing to purchase a $560,000 house using a 80% Loan to Value (LTV) ratio constant payment mortgage loan maturing in 35 years. The loan is fully amortising with a nominal...

PLEASE CAN YOU SHOW ANSWER EXPLANATION IN EXCEL PLEASE A borrower and lender negotiate a $20,000,000 interest-only loan at a 5 percent interest rate for a term of 15 years. There is a lockout period...

need as an excel sheet asap. thank you :) please let me know if this is any better visibly. needed as an excel sheet You are an investor looking to acquire a 150 unit apartment in Gainesville, FL. It...

4. The process where a borrower obtains a new loan to pay off an existing loan. A.Loan refinancing B.Market value of a loan C. Wraparound loan D. Home equity loan 15. You borrowed $235,000 with a...

PLEASE EXPLAIN HOW TO SOLVE USING A FINANCIAL CALCULATOR. 1) Maryann has a partially amortizing mortgage loan with the following information: Loan amount = $150,000 Note rate = 7.5% Monthly payment =...

What is operating capital, and why is it important?

Based on the data for the years 1962 to 1977 for the United States, Dale Bails and Larry Peppers" obtained the following demand function for automobiles: , = 5807 + 3.24X, 2= 0.22 se = (1.634) where...

14.28 Design a series RLC circuit with B = 20 rad/s and 0 = 1,000 rad/s. Find the circuits Q . Let R = 10 .

You are considering a $100,000 investment in one of two publicly traded companies in the same industry. Review the last three annual financial statements (same fiscal year) for two publicly traded...

Use Euler's , Midpoint, Heun's and Runge kutta 4th order methods with h=0.14 and h=0.35 to approximate y(0.8) where y(t) is the solution of the initial value problem dy 0.1t -1.417t =y -) * sin (,...

Triple D Corporation is all equity financed with total assets valued at $1 million, which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the firm is in the 40...

birch company have 5 sales employeesDuring an examination of financial statements, an auditor verifies management's assertions ie.existence, completeness, rights, valuation etc. In doing so, the...

AP constructed a new manufacturing plant for a total cost of $7,615,000 (not counting the cost of the land) and placed it in service on March 2. To finance the construction, AP took out a $6 million,...

6 Theory of Machines 5. A shaft carries five masses A, B, C, D and E which revolve at the same radius in planes which are equidistant from one another. The magnitude of the masses in planes A, C and...

Assume that a lender offers a 30-year, $150,000 adjustable rate mortgage (ARM) with the following terms: Initial interest rate = 7.5 percent Index = 1-year Treasuries Payments reset each year Margin...

A property is purchased for $70,000. The purchase is financed with a GPM carrying a 12 percent interest rate. A 7.5 percent rate of graduation will be applied to monthly payments beginning each year...

What is meant by a purchase money mortgage loan? When could a loan not be a purchase money mortgage?

The stem-and-leaf display of Exercise 3.16 uses only four stems. Construct a stem-and-leaf display for these data using repeated stems 1H, 2L, 2H, . . . , 4L. For example, the first observation, 29,...

For each observation in the data set, compute the difference dominant-hand count 2 nondominant-hand count Construct a stem-and-leaf display of the differences. Comment on the interesting features of...

The Connecticut Agricultural Experiment Station conducted a study of the calorie content of different types of beer. The calorie content (calories per 100 ml) for 26 brands of light beer are (from...