Given the Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: ΕΟΥ Index 8.6% 1 2 3 4 5 9.5% 10.5% 11.5% 10.5%
Given the Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: ΕΟΥ Index 8.6% 1 2 3 4 5 9.5% 10.5% 11.5% 10.5%
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...
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Question
![Given the following Adjustable Rate Mortgage (ARM):
Loan amount:
Term:
$100,000
20 years, monthly payment
Discount point:
0
Origination fee:
$8,000
Teaser rate:
7.25%
Margin:
225 basis points
Rate caps:
2.5% annually, 6% lifetime
Market Index:
1
EOY
Index 8.6% 9.5%
2
3
4
5
10.5%
11.5%
10.5%
What are the proper interest rates for calculating the monthly payments from year 2 t
lifetime cap)
10.85%, 11.75%, 12.75%; 13.75%; 12.75%
10%, 11.75%, 12.75%; 13.5%; 12.75%
O None of the above is all correct
O 9.75%, 11.75%, 12.75%, 13.25%, 12.75%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0b1d180e-8ff3-47d4-aa81-4a545c5ccc41%2Ff549650b-4728-405b-a020-a8cdeb740a77%2Fq9zfeor_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Given the following Adjustable Rate Mortgage (ARM):
Loan amount:
Term:
$100,000
20 years, monthly payment
Discount point:
0
Origination fee:
$8,000
Teaser rate:
7.25%
Margin:
225 basis points
Rate caps:
2.5% annually, 6% lifetime
Market Index:
1
EOY
Index 8.6% 9.5%
2
3
4
5
10.5%
11.5%
10.5%
What are the proper interest rates for calculating the monthly payments from year 2 t
lifetime cap)
10.85%, 11.75%, 12.75%; 13.75%; 12.75%
10%, 11.75%, 12.75%; 13.5%; 12.75%
O None of the above is all correct
O 9.75%, 11.75%, 12.75%, 13.25%, 12.75%
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