Question: Problem: A borrower takes-out a fully amortizing loan for $500,000. The term of the loan is 20 years, bearing interest of 2% over CPI, adjusting

Problem: A borrower takes-out a fully amortizing loan for $500,000. The term of the loan is 20 years, bearing interest of 2% over CPI, adjusting annually and compounding monthly. The initial CPI is 4%, and it will remain at 4% for the first two (2) years of the loan's term. The CPI will then fall to 2%, and it will remain at 2% for two (2) years. The CPI will then rise to 3%, and it will remain at 3% for two (2) years. The CPI will then fall to 2%, and it will remain at 2% for thirteen (13) years. Finally, for the final year of the loan's term, the CPI will rise to 3% for this one (1) year.

Assignment: Produce a spreadsheet similar to the one below, but with the PMT and Balance columns filled in

Year

Margin

Index

APR

Compounding

PMT

Balance

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