Assume the following for a one-year rate adjustable rate mortgage loan that is tied to the one- year Treasury rate and has monthly payments: Loan amount:150,000 Annual rate cap:2% Life-of-loan cap:5% Margin:2.75% First-year contract teaser rate:5.50% One-year Treasury rate at end of year 1:5.25% One-year Treasury rate at end of year 2:5.50% Loan term in years:30 years   Given these assumptions, calculate the following: a) Initial monthly payment; b) Loan balance end of year 1; c) Year 2 contract rate; d) Year 2 monthly payment; e) Loan balance end of year 2; f) Year 3 contract rate; g) Year 3 payment.

Q: A loan 1000 is repaid by equal annual amounts of principal for 10 years and annual interest of 7% on…

A: Equal installment  = Loan Amount / present value annuity Factor @rate of interest for life

Q: Assume that a lender offers a 30-year, $155,000 adjustable rate mortgage (ARM) with the following…

A: Adjustable Rate Mortgage(ARM): It is a home loan with a variable interest rate that changes over…

Q: Find the refund fraction on a 30-month loan with interest of $2,802 if the loan is paid in full with…

A: Refund fraction is the amount of interest refund a lender makes to the borrower because of early…

Q: Establish loan amortization schedules for the following loans to the nearest cent. a. A 36-month…

A: When a loan is taken, borrower requires to pay interest on it. Apart from interest, instalment of…

Q: An interest-only ARM is made for $200,000 for 30 years. The start rate is 5 percent and the borrower…

A: a) Computation:

Q: Straight bank loan. Right Bank offers EAR loans of 9.07% and requires a monthly payment on all…

A: Using excel PMT function to calculate monthly payment

Q: Consider the following fixed-rate level-payment mortgage pass-through security: Total principal…

A:

Q: What is the APR on this loan

A: Interest is the cost of borrowing a loan. It is the excess amount over the principal borrowing.…

Q: Calculate the effective annual rate on each of the following loans: a. A $5,000 loan for two years,…

A: Interest refers to the cost of money borrowed from a lender. It can be simple or compound. It is…

Q: Prepare an amortization schedule for a four-year loan of $165,280. The interest rate is 4% per year,…

A: EMI or monthly or annual mortgage payments are the fixed amount paid by the borrower to the lender…

Q: Question A loan can be settled by monthly payments of $350 in four years at 5.5% compounded monthly.…

A: Present value of balance payment will be the selling price of the contract.

Q: A loan of £8,000 is to be repaid by level monthly instalments of 185 in arrear over a period of 4…

A: given, P=8000 n=4 m=12 A=185

Q: A $17000 loan is to repaid by monthly payments of $390, the first payment is due in one year's time.…

A: given, pv = $17000 pmt = $390 r=10% m=12

Q: Prepare an amortization schedule for a five-year loan of $59,000. The interest rate is 7 percent per…

A: Amortization schedule is prepared as follows, formulas for each cell is given in the next screen…

Q: A 4 year loan of $125,000 with equal installment payments at the end of each year.The interest rate…

A: Therefore, P*[1-1/(1+r)^n]/r = 125,000  => P*[1-1/(1+7%)^4]/7% = 125,000 =>P*[1-0.7628]/7% =…

Q: What is the effective rate of a 15% discounted loan for 90 days, P200,000, with 10% compensating…

A:

Q: A basic ARM is made for $200,000 at an initial interest rate of 6 percent for 30 years with an…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Calculate the effective annual rate on each of the following loans: 1. $5,000 loan for 2 years,…

A: Effective interest rate refers to the real return that an individual or company earns on a saving…

Q: In an amortization table for a four-year loan of $45,280, given an interest rate of 11%, how much…

A: N = 4 years Loan = $45,280 Interest Rate = 11% Principal payment in second year = ?

Q: Find the APR for the following 5-year loan: A principal of £15,000 with a stated annual interest…

A: Excel formula which is used to calculate APR Formula:- APR =[ {(Interest + Fees )/ Loan amount} /…

Q: A loan of $4000 at 7.5% compounded monthly requires three payments of $1000 at 6, 12, and 18 months…

A: Compound interest means the interest on the principal plus the accumulated interest on the previous…

Q: Consider a $150,000 loan with an annual interest rate of 6.5 percent and a 30-year term. Discount…

A: Present value of annuity Annuity is a series of equal payments at equal interval over a specified…

Q: A $45,000 loan at 8.7% compounded semiannually is to be repaid by semiannual payments of $3,300…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: determine the lump-sum amount to be paid at the end of the loan period.

A: Amount: It is the sum of money to be paid at the end of the period. This sum of money also includes…

Q: floating rate mortgage loan is made for $100,000 for 30yrs at a start rate of 12% interest. The…

A: In this question principal at the end of year one would be the total mount paid in monthly…

Q: A floating rate mortgage loan is made for $120,000 for a 30-year period at an initial rate of 12…

A: Loan: When you get a loan, the repayment process will be spread out over a longer period of time and…

Q: A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12…

A: Loan balance at the end of year 1 can be calculated using  FV (rate, nper, pmt, [Pv], [type]) Rate…

Q: 4. Establish loan amortization schedules for 3-year loan of $20,000 (initial loan) with equal…

A: Amount of Loan = $20000 Interest Rate(r) = 5% Year (n)= 3 Let Annual Installment =P

Q: G.I loan over 30 years has an annual nominal interest rate of 3.8% paid quarterly. What is the…

A: "Hi, Thanks for the Question. Since you asked multiple questions, we will answer first question for…

Q: Assume that a lender offers a 30-year, $147,000 adjustable rate mortgage (ARM) with the following…

A: ARM Loan(Adjustable-Rate Mortgage Loan): It is  a mortgage loan with the financing cost on the note…

Q: A loan of £8,000 is to be repaid by level monthly instalments of £ 185 in arrear over a period of 4…

A: Using excel Rate function

Q: Determine the annual payment on a OMR15,000 loan that is to be amortized over a four-year period and…

A: Given, A= OMR15,000 n=4 r= 10%

Q: Suppose that a borrower wishes to borrow $989,000 today using a partially amortizing 30 year loan.…

A: To solve the question, first we need to use the formula for present value of annuity. Then, we will…

Q: A loan of P50k requires quarter payments of P2875 over 10-year period. These payments include…

A: Loan amount (L) = P 50000 Quarterly payment (Q) = P 2875 Duration (n) = 10 years = 40 payments Let r…

Q: Purchase a living room set for $3,700 at 10% add-on interest for 3 years.

A: Information Provided: Amount = $3700 Interest rate = 10% Term = 3 years

Q: A floating rate mortgage loan is made for $100,000 for a 30-year period at an initial rate of 12…

A: In accounting, accumulated interest is the amount of interest that has accrued but has not yet been…

Q: A basic ARM is made for $180,000 at an initial interest rate of 6 percent for 30 years with an…

A: Mortgage is long-term loan contract which is used to buy fixed asset generally home. Mortgage is…

Q: Assume a $175,000 mortgage loan and 10-year term. The lender is charging an annual interest rate of…

A: Given, Mortgage amount is $175000 Annual interest rate is 6%

Q: Prepare an amortization schedule for a three-year loan of $60,000. The interest rate is 6 percent…

A: The amortization schedule can be prepared as follows:

Q: A loan is being repaid by 20 level annual payments of R, where R is three times the amount of…

A: Given: Number of level annual payments: 20 Level payments: R R is three times interest accruing in…

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.