Note: For all the questions, do not round intermediate calculations and round your final answers to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Note: For all the questions, do not round intermediate calculations and round your final answers to the nearest two decimal places. 1. A fully amortizing CAM loan is made for $133,000 at 6 percent interest for 20 years. a. What will be the payments and balances for the first six months? b. What would payments be for a CPM loan? c. If both loans were repaid at the end of year 5, would the lender earn a higher rate of interest on either loan? Explain. 2. A $52,000 interest-only mortgage loan is made for 30 years at a nominal interest rate of 8 percent. Interest is to be accrued daily, but payments are to be made monthly. Assume 30 days each month. a. What will the monthly payments be on such a loan? b. What will the loan balance be at the end of 30 years? c. What is the effective annual rate on this loan? (Use Excel to compute the monthly interest rate). 3. A mortgage loan in the amount of $112,000 is made at 6 percent interest (compounded monthly) for 20 years. If the borrower and lender agree that the loan balance of $186,000 will be payable at the end of year 20. Payments are to be monthly. a. How much total interest will be paid from all payments? How much total principal will be paid? b. What will be the loan balance at the end of year 3? c. If the loan is repaid at the end of year 3, what will be the effective rate of interest? (Use Excel to compute the monthly interest rate). d. If the lender charges 4 points to make this loan, what will the effective rate of interest be if the loan is repaid at the end of year 3? (Use Excel to compute the monthly interest rate). 4. A reverse mortgage is made with a balance not to exceed $321,000 on a property now valued at $749,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 6 percent. a. What will the monthly payments be? b. What will be the loan balance at the end of year 3? 1 Page 5. Williams wants to buy a property for $125,000 and wants an 80 percent loan for $100,000. A lender indicates that a fully amortizing loan can be obtained for 30 years (360 months) at 5 percent interest; however, a loan fee of $5,100 will also be necessary for Williams to obtain the loan. a. How much will the lender actually disburse? b. What is the APR (annualized interest rate) for the borrower, assuming that the C. mortgage is paid off after 30 years (full term)? If Williams pays off the loan after five years, what is the effective interest rate? (Use Excel to compute the monthly interest rate). Note: For all the questions, do not round intermediate calculations and round your final answers to the nearest two decimal places. 1. A fully amortizing CAM loan is made for $133,000 at 6 percent interest for 20 years. a. What will be the payments and balances for the first six months? b. What would payments be for a CPM loan? c. If both loans were repaid at the end of year 5, would the lender earn a higher rate of interest on either loan? Explain. 2. A $52,000 interest-only mortgage loan is made for 30 years at a nominal interest rate of 8 percent. Interest is to be accrued daily, but payments are to be made monthly. Assume 30 days each month. a. What will the monthly payments be on such a loan? b. What will the loan balance be at the end of 30 years? c. What is the effective annual rate on this loan? (Use Excel to compute the monthly interest rate). 3. A mortgage loan in the amount of $112,000 is made at 6 percent interest (compounded monthly) for 20 years. If the borrower and lender agree that the loan balance of $186,000 will be payable at the end of year 20. Payments are to be monthly. a. How much total interest will be paid from all payments? How much total principal will be paid? b. What will be the loan balance at the end of year 3? c. If the loan is repaid at the end of year 3, what will be the effective rate of interest? (Use Excel to compute the monthly interest rate). d. If the lender charges 4 points to make this loan, what will the effective rate of interest be if the loan is repaid at the end of year 3? (Use Excel to compute the monthly interest rate). 4. A reverse mortgage is made with a balance not to exceed $321,000 on a property now valued at $749,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 6 percent. a. What will the monthly payments be? b. What will be the loan balance at the end of year 3? 1 Page 5. Williams wants to buy a property for $125,000 and wants an 80 percent loan for $100,000. A lender indicates that a fully amortizing loan can be obtained for 30 years (360 months) at 5 percent interest; however, a loan fee of $5,100 will also be necessary for Williams to obtain the loan. a. How much will the lender actually disburse? b. What is the APR (annualized interest rate) for the borrower, assuming that the C. mortgage is paid off after 30 years (full term)? If Williams pays off the loan after five years, what is the effective interest rate? (Use Excel to compute the monthly interest rate).
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
A line charge density pL of length L lies parallel to an infinite sheet of surface charge density ps. How much work is required to rotate the line charge so that it is vertical?
-
How do managers use information about scrap?
-
The Mussina Chemical Company produced three joint products at a joint cost of $117,000. These products were processed further and sold as follows. The company has had an opportunity to sell at...
-
Joe, the nurse manager for CCU, counsels Registered Nurse Bob about his errors in charting and tells Bob that the next time an error is made, a formal warning will be put in his personnel file. Bob...
-
NET Suppose you wanted to test the effect of three different e-mail requests inviting people to participate in a survey posted on the Internet. One simply contained a hyperlink with no explanation,...
-
Sales are budgeted at $370,000 for November, $390,000 for December, and $380,000 for January. Collections are expected to be 70% in the month of sale and 30% in the month following the sale. The cost...
-
The characteristic curves for the IVP - 0
-
The following alphabetical list of selected accounts taken from the general ledger of Mayne Corporation identify the accounts that are part of shareholders' equity as of December 3 1 , Year 2 :...
-
K The purchasing power (real value of money) decreases if inflation is present in the economy. For example, the purchasing power of $40,000 after t years of 7% inflation is given by the model P =...
-
How can organizations leverage emotional intelligence as a cornerstone of ethical leadership, promoting integrity, empathy, and social responsibility in decision-making processes and stakeholder...
-
4. Non-Renewable Resources under Perfect Competition Suppose you're the manager for a oil drilling operation, which will be in operation for the next two years (after which it will close). Based on...
-
The digits 1, 2, 3, 4, and 5 are randomly arranged to form a five-digit number. Complete parts (a) and (b) below. (a) Find the probability that the number is odd. The probability that the number is...
-
Why are comprehensive measures of supply chain performance such as total supply chain cost so difficult to develop? Your answer must be checked in Trunitin system to avoid any plagiarism
-
Marc Company assembles products from a group of interconnecting parts. The company produces some of the parts and buys some from outside vendors. The vendor for Part X has just increased its price by...
-
Presented below are the condensed financial statements of Global Enterprises, Inc. The companys inventory is valued using LIFO. The companys footnotes reveal that the LIFO reserve was as follows....
-
Chemical Boost, Inc. isa manufacturer of TA5 chemical and derivative products. Presented below is select information from Chemical Boosts recent annual cas soy report. The footnotes to the companys...
-
Dominick Portet Wines Inc. began operations to import fine wines from Australia to the United States. Sales and purchase information is pZro vided below. Assume that Portet Wines uses the LIFO method...
Study smarter with the SolutionInn App