Calculate the total interest paid during the term

Assignment Help Financial Management

Reference no: EM132055588

Property Purchase Price: $2,500,000

Appraised Market Value: $2,400,000

Property Net Income Estimate: $160,000 per year

Loan – to – Value Ratio: 70%

Interest Rate: 6.0%

Amortization Period: 25 years

Loan Term: 5 years

Required Debt Coverage Ratio: 1.25 (minimum)

Borrower’s Additional Closing Costs: $25,000

CALCULATE THE FOLLOWING:

1. Lender’s Effective Yield to maturity

2. Effective Borrowing Cost (EBC)

3. Total Interest paid during the term

4. Find the maximum loan amount using the maximum loan formula

5. Using the maximum loan, If the borrower pays 4 points for a reduced interest rate of 5.50%, what is the lender’s effective yield if the loan is held for the 5-year term?

Reference no: EM132055588

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