The treasurer of a firm has an opportunity to purchase a secured 15% mortgage with 5 years remaining for $10,000. If the firm purchases the mortgage, it will receive five annual payments of $3,000 each. If the treasurer wants no less than a 12% return on ong-term cash investments, the NPV of the mortgage will be (rounded to the nearest dollar)
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- Assume you are purchasing an income-producing property for $10,000,000. The estimated NOI in the next year is $600,000. A lender is willing to provide a mortgage with an annual interest rate of 4.0%. Payments will be made monthly based on a 30-year amortization schedule. The lender requires a minimum debt coverage ratio of 1.25. Based on this required minimum debt coverage ratio, what is the largest loan the lender is willing to make (rounded to the nearest dollar)? Assume the lender will not allow the loan to exceed 85% of the acquisition price under any circumstances. $8,500,000 O $8,478,000 O None of the selections is within a $2 of the correct answer O $8,378,450 O $13,964,083A borrower has secured a 30 year, $131,000 loan at 8% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7.5%. However, the new loan requiers the borrower to pay 2 points at closing. What is the return on investment if the borrower expects to remain in the home for the next fifteen years? Please input your answer as an annual interest rate (i.e. 8.32% would be input as 8.32).A borrower has secured a 30 year, $131,000 loan at 8% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7.5%. However, the new loan requiers the borrower to pay 2 points at closing. What is the return on investment if the borrower expects to remain in the home for the next fifteen years? Please input your answer as an annual interest rate (i.e. 8.32% would be input as 8.32).
- A lender is willing to offer an 70% LTV convertible mortgage to a borrower that is using it to purchase a $1.1m building. The convertible loan allows the lender to acquire 55% of the equity ownership in the property at the end of the fifth year. Property prices are expected to grow 3% annually. The loan is amortized over 20 years with monthly payments. and the loan interest rate is 6%. What is the effective yield of the loan? [EnterAn investor has $60,000 to invest in a $280,000 property. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and a second mortgage for $40,000 at 13 percent for 20 years. All loans require monthly payments and are fully amortizing.a. Which alternative should the borrower choose, assuming he will own the property for the full loan term?b. Would your answer change if the borrower plans to own the property for only five years?c. Would your answers to (a) and (b) change if the second mortgage had a 10-year term?A borrower has secured a 30 year, $154,00O loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the new loan requiers the borrower to pay 2 points at chopsing. What is the return on investment if the borrower expects to remain in the home for the next fifteen years? Please input your answer as an annual interest rate (i.e. 8.32% would be input as 8.32).
- A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing to pay for the loan? (Correct Anwser: C) A:$75,000 B:$111,028 C:$118,478 D:$168,646 How to solve this problem? Give typing answer with explanation and conclusionAs a graduating senior with a promising career in finance, Central Bank offers you a mortgage of $200,000. You may choose between a 30-year mortgage with an interest rate of 4.375% or a 15-year mortgage at 3.500%. Both interest rates are annual stated rates with interest compounded monthly. Assume that for 30-year mortgage, the bank requires you to pay 1% point. Compute an amortization table that shows the amount of interest you can report for taxes and amount of principal payment each year for each loan. Use two different ways to do it as we did in class: with and without using the functions PPMT and IPMT. PLEASE USE EXCEL and show functions.Suppose you are buying your first condo for $300,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 7.2% nominal interest rate, with the first payment due in one month. What will your monthly payments be? a. $1,923.01 b. $2,501.67 c. $2,024.22 d. $2,036.36 e. $1,934.55
- Suppose you take out a $117,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last…A borrower takes out a 30-year loan for a house worth $250,000. If the annual interest rate is 6%. if the borrower chooses to pay $40,000 at the end of year 12, what will the new payments be assuming the loan maturity will not be reduced?Suppose you are buying your first condo for $240,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30- year, monthly payment, amortized mortgage at a 6.8% nominal interest rate, with the first payment due in one month. What will your monthly payments be? Oa. $1,564.62 O b. $1,900.00 Oc. $1,466.83 Od. $1,555.80 e. $1,458.57