RE410_Assignment_2_Solutions

RE410_Assignment_2_Solutions - Keyi Xu RE 410 Spring...

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Keyi Xu RE 410, Spring 2007-2008 Assignment 2 – Solutions: Total Points: 15 *Grading Criteria for Assignments and Exams: Must show computing process (Inputs to Calculator and/or Equations, CFs…) to receive Any Credit . If correct process is shown in calculations but answers are incorrect, partial credits will be given. Rounding your answers: Please keep at least two digits after the whole number (example: $599.55 ). * Effective Date: 2/19 (First two written assignments are exempt) (5 points) 1. Consider a constant payment mortgage of $100,000, maturity 30 years, interest rate 6%, monthly payments. What is the yield of the mortgage if Step 1: PV = $100,000, Namt = 360, I = 6%, FV = 0, ~PMT = $599.55 (1 point) (a) No point, no prepayment. 6% (1 point) (b) No point, prepaid after 10 years? 6% (1 point) (c) 1 point, and no prepayment After Step 1, change PV = $99,000, ~I = 6.09% (1 point) (d) 1 point, prepaid after 10 years, no prepayment penalty After Step 1, change N = 120, ~FV = 83,685.72, then ~I = 6.14% (1 point) (e) 1 point, prepaid after 10 years, 2% of prepayment penalty After Step 1, change N = 120, ~FV = 83,685.72, *1.02 = 85,359.44 then press FV again, change PV = 99,000, ~I = 6.27% (3 points) 2. Consider a constant payment mortgage of $100,000, maturity 30 years, interest rate 6%, monthly payments with 2 up front points. What is the value of the mortgage after 4 years, if the market
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This note was uploaded on 05/12/2008 for the course REAL ESATE 410 taught by Professor Chu during the Spring '08 term at University of Wisconsin.

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RE410_Assignment_2_Solutions - Keyi Xu RE 410 Spring...

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