A 10-year $200,000 mortgage will be paid off with level quarterly amortization payments. Assume that the interest rate on the mortgage is 6%, convertible quarterly, and that payments are made at the end of each quarter. Find the modified duration of this mortgage. Do it with formulas and not excel.
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Problem 54.12 A 10-year $200,000 mortgage will be paid off with level quarterly amortization payments. Assume that the interest rate on the mortgage is 6%, convertible quarterly, and that payments are made at the end of each quarter. Find the modified duration of this mortgage. Do it with formulas and not excel.
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- QUESTION ONEA fully amortizing mortgage loan is made for sh.100,000 at 6 percent interest for 20 years.Required;Calculate the monthly payment for a CPM loan.What will the total of payments be for the entire 20-year period? Of this total, how much will be interest?Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total interest will have been collected by then?The borrower now chooses to reduce the loan balance by sh.5,000 at the end of year 8.What will be the new loan maturity assuming that loan payments are not reduced?Assume the loan maturity will not be reduced. What will the new payments be?Qw.12.a A fully amortizing mortgage loan is made for $104,000 at 6 percent interest for 20 years. Required: a. Calculate the monthly payment for a CPM loan. b. What will the total of payments be for the entire 20-year period? Of this total, how much will be the interest? c. Assume the loan is repaid at the end of eight years. What will be the outstanding balance? How much total interest will have been collected by then? d. The borrower now chooses to reduce the loan balance by $5,400 at the end of year 8. (1) What will be the new loan maturity assuming that loan payments are not reduced? (2) Assume the loan maturity will not be reduced. What will the new payments be?Question 3: The interest rate for the first five-year term of a $400,000 mortgage loan is 3.3% compounded semi-annually. The mortgage requires monthly payments over a 25-year period. Suppose that, at the end of the third year of the mortgage, the borrower makes a prepayment of $80,000. How much will the amortization period be shortened?
- ch 3. A fully amortizing mortgage is made for $100,000 at 6.5% interest. If the monthly payments are $1000 per month, then when will the loan be repaid? 4. A partially amortizing mortgage loan is made for $60,000 for a term of 10 years. The borrower and lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that a. If the interest rate is 7%, what must monthly payments be over the 10 year term? b. If the borrower chooses to repay the loan after five years instead of at the end of year 10, then what will the loan balance be at the end of year 5? 5. A fully amortizing CAM loan is made for $125,000 at 11 percent interest for 20 years. a. What will be the monthly payments and remaining loan balances for the first six months? b. c. What would monthly payments be if the loan were CPM instead? If both loans (the CAM and CPM) are repaid at the end of year 5, would the lender earn a higher rate of interest on either loan? Which one and why? Use Excel. 6. A $100,000…Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? O a. Exactly 10% of the first monthly payment represents interest. b. The monthly payments will increase over time. O c. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 109%6. d. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. O e. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.Question 1. Assume you have just taken a 30-year mortgage of $550,000 at 9% with monthly compounding. Further, suppose that in 10 years (immediately after the 120th payment) interest rates fall to 6% with monthly compounding. You decide to refinance at that time to a 15-year loan at the new lower rate. Assume refinancing costs are 2% of the amount refinanced and will be rolled into the new loan. Find your new payment for the refinanced loan. Question 2. Suppose you deposit $100,000 per year in a savings account paying 8% interest for 10 years. You wish to withdraw the funds in 5 equal installments, one year apart, starting in year 11 and have a balance remaining in your account of $75,000 immediately after you make your fifth withdrawal. How much can you withdraw per year? HINT: A timeline will help with this.
- *13.4.7 Find the monthly payment needed to amortize principal and interest for the fixed-rate mortgage. Use either the regular monthly payment formula or the given table Loan Amount Interest Rate $85,000 Term Real Estate Amortization Table 6% 20 years E Click the icon to view the Real Estate Amortization Table. Monthly payments to Repay Principal and Interest on a ST000 mortgage The monthly payment is $ (Round to the nearest cent as needed.) Term of Mortgage (years) Annual rate 5. 10 15 20 25 30 40 3.0% 17.96869 9.65607 6.90582 5.54598 4.74211 4.21604 3.57984 3.5% 18.19174 9.88859 7.14883 5.79960 5.00624 4.49045 3.87391 4.0% 18.41652 10.12451 7.39688 6.05980 5.27837 4.77415 4.17938 4.5% 18.64302 10.36384 7.64993 6.32649 5.55832 5.06685 4.49563 5.0% 18.87123 10.60655 7.90794 6.59956 5.84590 5.36822 4.82197 5.5% 19.10116 10.85263 8.17083 6.87887 6.14087 5.67789 5.15770 6.0% 19.33280 11.10205 8.43857 7.16431 6.44301 5.99551 5.50214 6.5% 19.56615 11.35480 8.71107 7.45573 6.75207 6.32068…2B. a. Suppose we have a four year fixed-payment loan with $900 payments made at the end of each year. Given a market interest rate of 7 percent, how much was initially borrowed?V4. A $200,000 30 year mortgage with a contract rate of 8.94%, $3000 closing costs (lawyer, appraisal, and transfer tax) and $1,000 in discount points (i.e mortgage setup fee). The monthly mortgage payment is determined to be $1600. what will be the effective borrowing rate if the borrower decides to pay off the loan at the end of year 8? Assume that the mortgage is based on monthly compounding.
- Finance Assume we have a $500,000 mortgage at 3.5% original interest rate, with a 30-year term and monthly payments. The interest rate can be adjusted at the end of each year, and we assume the rate increases 0.15% after the first year and another 0.5% after the second year. What is the effective yield of the mortgage if the loan is paid off at the end of the third year?12. Amortized loans Mortgages and other amortized loans (meaning equal or blended payments) involve regular payments at fixed intervals. These are sometimes called reverse annuities, because you get a lump-sum amount as a loan in the beginning, and then you make the periodic payments (usually monthly or more frequently, depending on the agreement) to the lender. You've decided to buy a house that is valued at $1 million. You have $400,000 to use as a down payment on the house, and you take out a mortgage for the rest. Your bank has approved your mortgage for the balance amount of $600,000 and is offering you a 25-year mortgage with 12% fixed nominal interest rate (called the APR, or Annual Percentage Rate) compounded semiannually. According to this proposal, what will be your monthly mortgage payment? OOO $7,740 $6,192 $8,359 $9,598 Your friends suggest that you take a 15-year mortgage, because a 25-year mortgage is too long and you will lose a lot of money on interest. If your bank…OLA#9.1: A 30-year, $450,000 mortgage at 3.30% compounded annually is repaid with monthly payments. a. What is the size of the monthly payments? b. Find the balance of the mortgage at the end of 7 years? c. By how much did the amortization period shorten by if the monthly payments are increased by $125 at the end of year seven?