Ch. 15What is the present value of a 30-year loan at 6% interest with 360 level payments of $1,000 each? N: 360 I: 6/12 PV: Solve PMT: 1000 FV:
0 What would be the fixed level monthly payment on a 15 year 6% loan of $100,000? N: 180 I: 6/12 PV: 100000 PMT: Solve FV: 0 For the loan in problem 3 above what would be the remaining principal balance on the loan after two payments have been made? N: 178 I: 6/12 PV: Solve PMT: 843.86 FV: 0 For a loan of $100,000 at 7% annual interest for 30 years with equal monthly payment, what will be the balance of the loan at the end of four years? N: 360 I: 7/12 PV: -100000 PMT: Solve FV: 0 , N: 312 I: 7/12 PV: Solve PMT: 665.30 FV: 0 What is the lenders yield on the following mortgage: Term 360 months, interest rate 7%, monthly payment $1,000, initial loan balance $150,307.57, discount points 3.53%? 0.0353 * 150307.57=5307.57, Net loan proceeds = 150307.57 – 5307.57 = 145000, N: 360 I: Solve(Then * by 12) PV: -145000 PMT: 1000 FV: 0 Take the loan in 6 above but now look at it from the borrower’s perspective. In addition to the 3.53% discount points to the lender they have 3rdparty loan expenses of $2,692.43 so the net proceeds received by the borrower is $142,307.57. What are the borrower’s effective borrowing costs assuming that they hold the loan to maturity? (5307.57+2692.43), 150307.57-8000=142307.57, N: 360 I: Solve(* by 12) PV: 142307.57 PMT:-1000 FV: 0 Now assume the loan described in 6 and 7 above is paid off by the borrower in 7 years. Calculate the lender’s yield Ans: 7.68% and the borrower’s effective borrowing costs: 8.034% N: 276 I: 7/12 PV: Solve PMT: 1000 FV: 0, N:84 I: Solve PV: -145000 PMT: 1000 FV: 137001.46, N: 84 I: Solve PV: -142307.57 PMT: 1000 FV: 137001.46 A mortgage banker is originating a level payment mortgage with the following terms: 9% interest, 15 year term, level monthly payment, loan amount $160,000, discount points to lender$2,000, other upfront costs not paid to lender $2,000. Calculate lenders yield assuming no prepayment Ans: 9.22% and borrowers EBC: 9.43% N: 180 I: 9/12 PV: 160000 PMT: Solve FV: 0, N: 180 I: Solve PV: -158000 PMT: 1622.83 FV: 0, YTM=0.76793*12, EBC=0.7852*12

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- Spring '14
- JuliaL.Hansen
- Interest