How much interest is paid in the fifth year

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Reference no: EM131881005

1) A mortgage loan of $1,875,000 has just been made on a property valued at $2,500,000. The interest rate is 6% with 2 points. The loan will require level monthly payments to amortize the principal over 25 years. The mortgage also carries a 1% prepayment penalty.

a. How much interest is paid in the fifth year?

b. If the mortgage is paid off after 7 years what will the effective yield be?

Reference no: EM131881005

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