Question 4 Consider a $5,000,000, 9%, constant payment mortgage (CPM) with monthly payments. What is the regular monthly payment amount and the balloon payment amount in each of the following cases: (a) Fully-amortizing, 30-year loan (b) 30-year amortization, 10-year balloon (c) 15-year amortization, 10-year balloon (d) What is the major disadvantage, and advantage, of the 15-year amortization-rate 10- year loan in (c) as compared to the 30-year amortization-rate 10-year loan in (b)?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Question 4
Consider a $5,000,000, 9%, constant payment mortgage (CPM) with monthly payments. What is the
regular monthly payment amount and the balloon payment amount in each of the following cases:
(a)
Fully-amortizing, 30-year loan
(b) 30-year amortization, 10-year balloon
(c)
15-year amortization, 10-year balloon
(d)
What is the major disadvantage, and advantage, of the 15-year amortization-rate 10-
year loan in (c) as compared to the 30-year amortization-rate 10-year loan in (b)?
Transcribed Image Text:Question 4 Consider a $5,000,000, 9%, constant payment mortgage (CPM) with monthly payments. What is the regular monthly payment amount and the balloon payment amount in each of the following cases: (a) Fully-amortizing, 30-year loan (b) 30-year amortization, 10-year balloon (c) 15-year amortization, 10-year balloon (d) What is the major disadvantage, and advantage, of the 15-year amortization-rate 10- year loan in (c) as compared to the 30-year amortization-rate 10-year loan in (b)?
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