Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? a. The monthly payments will increase over time. b. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment. c. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. d. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%. e. Exactly 10% of the first monthly payment represents interest.

Which of the following statements regarding a 20-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? a. The monthly payments will increase over time. b. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment. c. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. d. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%. e. Exactly 10% of the first monthly payment represents interest.

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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Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT? Exactly 8% of the first monthly payment represents interest. The monthly payments will decline over time. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity. The amount representing interest in the first payment would be higherif the nominal interest rate were 6% rather than 8%.
Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? 1. Exactly 10% of the first monthly payment represents interest. 2. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity. 3. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment. 4. The monthly payments will decline over time. 5. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.
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.
1. You have just obtained a commercial mortgage for $6.25M with a 5-year term, 25-year amortization period and 6.50% mortgage interest rate. (a) Construct an amortization table for the term of the loan assuming annual payments. What is the annual payment? What is the balance at maturity? (b) What is the e¤ective cost of borrowing if the borrower pays an origination fee of $30,000? (c) The borrower can repay the balance of the loan at any time prior to its maturity, but must pay a penalty of 5% of the outstanding balance. What is the cost of borrowing if the borrower pays an origination fee of $30,000 and pays off the remaining balance of the loan after making payments for 4 years?
a. What will be the monthly payment on a 30-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded monthly? How much interest is paid over the life of the loan? b. What will be the monthly payment on a 30-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded continuously? How much interest is paid over the life of the loan? c. What will be the monthly payment on a 15-year, $250,000 mortgage loan, where the interest rate is 6% per year, compounded monthly? How much interest is paid over the life of the loan?
Consider a 15 year, fixed rate mortgage for $150,000 at a nominal rate of 8%. The loan comes with a facility to pay end of year installments. What is the duration of the loan? If interest rates increase to 8.25% immediately after the mortgage is made, how much is the loan worth to the lender?
assume a $175,000 mortgage loan and 10-year term. The lender is charging an annual interest rate of 6 percent and 4 discount points at origination. a. What is the monthly payment Assuming that it is based on an amortization period of 30 years? b. What will be the required balloon payment at the end of the tenth year? c. What is the effective borrowing cost on the loan if it is held to maturity? Give typing answer with explanation and conclusion
A mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: What is the Monthly Payment? In preparing an Income Statement, what is the Interest Expense for years 1 – 5? What is the Principal Balance at the end of year 6? What is the value of the loan at the expiration? If rates remain constant (flat), what would the benefit be to refinance this loan after year 10? do all the questions 1-5 and show the formulas in excel and show how you got it
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	a.	The monthly payments will increase over time.
	b.	A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
	c.	The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity.
	d.	The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.
	e.	Exactly 10% of the first monthly payment represents interest.