What is the cash flow to tranche a investors in year 1

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A CMO is being issued with 2 tranches:- Tranche B has $10 million in principal and a 4.3% coupon.

- Tranche A has $16 million in principal and a 4.3% coupon.

The mortgages backing the security issued are FRM at a mortgage rate of 4.3% with 10 year maturities and annual payments. There is no guarantee/servicer fee. Prepayment is assumed to be 5% CPR.

Remember, the sum of tranches' principal is the total principal (balance) principal owed by the mortgage pool.

What is the cash flow to Tranche A investors in year 1? Round your answer to two decimal points (e.g. if your answer is $45,666.6666, write 45666.67).

Reference no: EM132906078

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