A price level adjusted mortgage ( PLAM) is made with the following terms: Amount = $ 96, 800 Initial interest rate = 4 percent Term = 30 years Points = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage?

A price level adjusted mortgage ( PLAM) is made with the following terms: Amount = $ 96, 800 Initial interest rate = 4 percent Term = 30 years Points = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $96, 800 Initial interest rate = 4 percent Term = 30 years Points = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year ( BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage?
A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $95,800Initial interest rate = 4 percentTerm = 30 yearsPoints = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY).b. What is the loan balance at the end of the fifth year?c. What is the yield to the lender on such a mortgage?
A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $95,700 Initial interest rate = 4 percent Term = 30 years Points = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage? Please SHOW me how this is done. I cannot calculate payment when inputing these values to Excel. Thank you!
A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $96,000 Initial interest rate = 4 percent Term = 30 years Points 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the payments at the beginning of each year (BOY). Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Payments Year 1 $ 90,240.00 Year 2 $ 84,825.60 Year 3 $ 79,736.06 Year 4 $ 74,951.90 Year 5 $ 70,454.79
A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $96,000Initial interest rate = 4 percentTerm = 30 yearsPoints = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: b. What is the loan balance at the end of the fifth year?c. What is the yield to the lender on such a mortgage? I am having trouble with b. and c.
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