Reverse annuity mortgage is made with balance not to exceed

Assignment Help Financial Management
Reference no: EM13878185

A reverse annuity mortgage is made with a balance not to exceed $300,000 on a property now valued at $700,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 11% MEY. a. [3] What will the monthly payments be? b. [3] What will the RAM balance be at the end of year 3? c. [4] Assume that the borrower must have monthly draws of $2,000 for the first 50 months of the loan. The remaining draws from months 51 to 120 must be determined so that the $300,000 maximum is not exceeded in month 120. What will the draws by the borrower be during months 51 to 120? d. [2] Suppose property experiences a 1% appreciation (MEY, starting today), and the borrower has a balance of $300,000 at year 10 (by receiving payments computed in a). No payments are made thereafter. How many years from loan closing will the loan balance begin to exceed the house value?

Reference no: EM13878185

Questions Cloud

Compute the standard deviation of this portfolio : An equally weighted portfolio consists of 46 assets which all have a standard deviation of 0.119. The average covariance between the assets is 0.08. Compute the standard deviation of this portfolio.
Determine the magnitude of the resultant force : Determine the magnitude of the resultant force FR = F1 + F2 and its direction, measured counterclockwise from the positive xaxis.
How the public feels about the defendant : Despite how the public feels about the defendant the defense attorney is capable of providing the needed services to prove innocents upon a reasonable doubt. In order for this to take place the defendant must be willing to build a trusting relati..
A borrower is faced with choosing between two loans : A borrower is faced with choosing between two loans. Loan A is available for $75,000 at 10% MEY for 30 years, with 6 points included in the closing costs. Loan B would be made for the same amount, but for 11% MEY for 30 years, with 2 points included ..
Reverse annuity mortgage is made with balance not to exceed : A reverse annuity mortgage is made with a balance not to exceed $300,000 on a property now valued at $700,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 11% MEY. No payments are made thereaft..
Assume that the capm assumptions hold in the market : Tom's portfolio consists solely of an investment in Merck stock. Merck has an expected return of 13% and a volatility of 25%. The market portfolio has an expected return of 12% and a volatility of 18%. The risk-free rate is 4%. Assume that the CAPM a..
Explain using supply and demand graphs : How could the minimum wage rate and migrant housing standards be expected to affect the prices of consumer goods? Explain, using supply and demand graphs.
Cash flow from operating activities and investing activities : Which of the following is NOT a cash flow from operating activities. Which of the following is NOT a cash flow from investing activities? Which of the following is NOT a cash flow from operating activities
What is a proprietary fund? : Compare and contrast the way that governments and for-profit entities deal with pension plans

Reviews

Write a Review

Financial Management Questions & Answers

  According to the efficient market hypothesis

According to the efficient market hypothesis, price of actively traded stocks ____.

  Compute the expected share price

Suppose the dividends for the Seger Corporation over the past six years were $1.04, $1.12, $1.21, $1.29, $1.39, and $1.44, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method.

  How many in dividends were paid to shareholders

New Money inc. reported $50 million of net income and $770 of retained earnings. the previous retained earnings were $780. How many in dividends were paid to shareholders during that year? Assume that all dividends declared were paid.

  Owner of a call that expires in the money

Owner of a call that expires in the money

  Her internal rate of return on this investment was

Early in 2013, Maria bought shares of MBA Inc. at $27.85 per share. She received the following dividends per share (end of year). 2013 $1.50 2014 $2.00 2015 $2.50 Immediately after receiving the 2015 dividend, she sold the stock for $32.50 per share...

  Many other service providers by centralizing manufacturing

Dunkin' Donuts joined many other service providers by centralizing manufacturing. Doughnut making in a geographic area is now done centrally for many stores, and the doughnuts are trucked to stores in the early morning. Imagine the decision of the fr..

  Why are equity investment returns typically more than bond r

Why are equity investment returns typically more than bond returns? A) Equities are riskier than bonds B) Bonds are riskier than equities C) Bonds pay interest payments   D) Both A & C

  Difference between fundamental and technical analyst

What is the difference between a fundamental analyst and a technical analyst? Strong-form market efficiency implies that one could earn above-average returns by examining the history of a firm's stock price. Sustainable growth rates can be estimated ..

  Should investors care about a multinational firm

Should investors care about a multinational firm's accounting exposure - Accounting exposure is any exposure of a multinational firm's consolidated financial statements to exchange rate movements.

  What is the total cost of job

What is the total cost of Job 6.15 if Business Solutions applies overhead at 50% of direct labor cost and what is the total cost of job 6.15 is Business Solutions uses activity based costing?

  What is the NPV of this opportunity

A friend offers to give you 10 payments of $1,500 at annual time periods zero through 10 except year three if you give him $13,500 at year three. What is the NPV of this opportunity if i=20%?

  Monitor expenditure and compare with financial plan

Report and monitor expenditure and compare with financial plans so that recommendations are developed for key stakeholders.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd