A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $800. What if the interest rate increases to 13 percent at the end of year 1? How much interest will be accrued as negative amortization in year 2 if the payment remains at $800?
A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $800. What if the interest rate increases to 13 percent at the end of year 1? How much interest will be accrued as negative amortization in year 2 if the payment remains at $800?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 41P
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A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $800.
What if the interest rate increases to 13 percent at the end of year 1? How much interest will be accrued as negative amortization in year 2 if the payment remains at $800?
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