Question: A reverse mortgage is made with a balance not to exceed $250,000 on a property valued at $600,000. The loan calls for monthly payments to

A reverse mortgage is made with a balance not to exceed $250,000 on a property valued at $600,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 10 percent. a. What would the monthly payments be? b. What will be the loan balance at the end of year 4? c. Assume that the borrower must have monthly draws of $1,800 for the first 50 months of the loan. The remaining draws from months 51 to 120 must be determined so that the $250,000 maximum is not exceeded in month 120. What will draws by the borrower be during the months 51 to 120?

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