A newly issue CMO's mortgage pool has a balance of $98.15 million with an average interest...

 

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A newly issue CMO's mortgage pool has a balance of $98.15 million with an average interest rate of 11.65% payable annually over a five-year term. There are two tranches. Priority payments will be made to Tranche A and will include the coupon, all amortization from the mortgage pool, and the interest that will be accrued to Tranche Z until Tranche A's principal is fully repaid. Tranche Z will accrue interest without any cash payments until the senior tranche is repaid. It will receive current interest and principal payments at that time. Tranche A has a principal balance of $49.79 million with an annual coupon of 8.29%. Tranche Z has a principal balance of $41.69 million with an annual coupon of 11.65%. What will be equity's annual cash flow in the year immediately after Tranche A has been fully repaid? A newly issue CMO's mortgage pool has a balance of $98.15 million with an average interest rate of 11.65% payable annually over a five-year term. There are two tranches. Priority payments will be made to Tranche A and will include the coupon, all amortization from the mortgage pool, and the interest that will be accrued to Tranche Z until Tranche A's principal is fully repaid. Tranche Z will accrue interest without any cash payments until the senior tranche is repaid. It will receive current interest and principal payments at that time. Tranche A has a principal balance of $49.79 million with an annual coupon of 8.29%. Tranche Z has a principal balance of $41.69 million with an annual coupon of 11.65%. What will be equity's annual cash flow in the year immediately after Tranche A has been fully repaid?

Answer rating: 100% (QA)

To determine the equitys annual cash flow in the year immediately after Tranche A has been fully rep... View the full answer