CH13 - 13-1MortgagesChapter 1313-2◆Standard Fixed...

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Unformatted text preview: 13-1MortgagesChapter 1313-2◆Standard Fixed Rate◆Variable Rate◆Refinancing and Prepayments◆Marketable MortgagesMortgages13-3P = PrincipalM = Periodic paymentY = Interest rateFixed Rate Mortgage12…nPM…MM[ ].PVAPMPVAMP)y1(M)y1(My1MPy,ny,nn2==++++++=13-4P = \$100, y = 10%, n = 20Example.75.115136.8100M==Total Payments = (20)(11.75) = 235.Interest = 235 – 100 = 135= Total – Principal.13-5RepaymentTimeP Interestof P 100198.25101.75 = 11.75 – 10.00296.339.831.92 = 11.75 – 9.8339.6313-6AMj= Amortization of principal in period jAmount of Repayment of Principal Called Amortization+=+-1jnj)y1(1MAMIf n = 20, P = 100, y = 10%, j = 10.12.4)10.1(175.11AM1102010==+-13-7The interest in period j = IjIj= M – AMj\$ Interest = – \$ AmortizationI10= 11.75 – 4.12 = 7.63.MortgagePayment13-8Remaining Principal at time j = PjPj= [M][PVAn-j]P10= [11.75][PVA20-10,10%]= [11.75][6.1446] = 72.20.13-9%.20.725136.81446.6PVAPVAPeriodsjafterRemainingP%njn===-...
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CH13 - 13-1MortgagesChapter 1313-2◆Standard Fixed...

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