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An interest only mortgage is made for $80,000 at 10 percent interest for 10 years. The lender and borrower agree

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An “interest only” mortgage is made for $80,000 at 10 percent interest for 10 years. The lender and borrower agree that monthly payments will be constant and will require no loan amortization.

a. What will the monthly payments be?

b. What will be the loan balance after 5 years?

c. If the loan is repaid after 5 years, what will be the yield to the lender?

d. Instead of being repaid after 5 years, what will be the yield if the loan is repaid after 10 years?

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a Monthly Payments 666 67 Solution n 10x12 or 120 i 10 12 or 0 83333 PV 8…View the full answer


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Related Book For  answer-question
Real Estate Finance and Investments

Real Estate Finance and Investments

ISBN: 978-0073377339

14th edition

Authors: William Brueggeman, Jeffrey Fisher

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Question Details
Chapter # 4
Section: Problems
Problem: 10
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Question Posted: September 26, 2018 12:28:28
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