Jonathan just bought an apartment in California which cost $ 10 million. The down payment was 30%,
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Question:
- Jonathan just bought an apartment in California which cost $ 10 million. The down payment was 30%, and the balance of his mortgage was $7 million. The borrowing interest rate is 3%. The term is 30 years. (60 points)
- Please fill this table. (20 points)
| At the end of the first month | At the end of the second month |
Beginning month balance |
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Interest payment |
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Principal payment |
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Remaining balance after the payment |
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- Assume no prepayment. What is the Macaulay duration of this mortgage loan? (Note. The calculation can be done using Excel. On the exam, I will not ask you this type of calculation. But I may ask you to write down the procedures.) (40 points)
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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