HW_5Fall2010 - Homework#5:Opens::SaturdayOct2ndat 11:55pm...

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Homework #5:    Opens:  Tuesday Sept 28th at 3pm      Closes:  Saturday Oct 2 nd  at  11:55pm 4 Questions 1. A bank makes a 360-month mortgage loan to a sub-prime borrower for a loan  amount of $250,000.  For the first three years of the loan, the borrower will pay the  monthly payment that would result if a teaser rate of 2.5% per year was applied to  the entire 360-month term. But the low payment and teaser rate do not last the full  360 months. After the first 36 payments, the interest rate will become 11%, the rate  of return demanded by the market for the risks posed by the sub-prime borrower,  and the loan’s monthly payment will increase.  The new rate will remain in effect for  the remainder of the loan.  Calculate the loan’s balance after the 36 th  payment is  made. A.
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HW_5Fall2010 - Homework#5:Opens::SaturdayOct2ndat 11:55pm...

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