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Question

A 25-year, quarterly amortizing, fixed rate hotel mortgage loan for $300 million has a contract rate of 5%.

Closing costs worth $. 75000 and 2 discount points are applied. Periodic payment on the loan? What is the total friction cost at origination? What is the APR?   


Below are the answers I have come up with. However, I am not sure if I am calculating the information correctly in regards to the last two questions. Does the total friction cost only include the discount points, or should the closing cost being included? Also, for the APR, I included the closing cost and the discount points into the PV to get 4.80%. I am unsure if this is the correct process, and I cannot find a consistent answer for the problem solving. Thank you!


  • Periodic payment on the loan?

$5,272,283.63

  • What is the total friction cost at origination?

$6,000,000

  • What is the APR?

4.80%

Top Answer

Periodic Payment = 5,167,612.35 Friction Cost at... View the full answer

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