A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $95,000 Initial interest

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A price level adjusted mortgage (PLAM) is made with the following terms:

Amount = $95,000
Initial interest rate = 4 percent
Term = 30 years
Points = 6 percent
Payments to be reset at the beginning of each year.
Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years:

a. Compute the payments at the beginning of each year (BOY).

b. What is the loan balance at the end of the fifth year?

c. What is the yield to the lender on such a mortgage?

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Real Estate Finance and Investments

ISBN: 978-0073377339

14th edition

Authors: William Brueggeman, Jeffrey Fisher

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Question Posted: Sep 26, 2018 12:45 PM

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A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $95,000 Initial interest

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a Compute the payments at the beginning of each year of the PLAM Principal 95000 Inflation Adjustmen...View the full answer

Real Estate Finance and Investments

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