What is the initial payment on mortgage

Assignment Help Finance Basics
Reference no: EM132474020

Consider a 1-year ARM, which has 30-year maturity, fully amortizing, $75,000 mortgage, indexed to the 1-year constant maturity Treasury with a 3% margin, and 2% annual interest rate cap. The initial contract rate is 5.75%.

(a) What is the initial payment on this mortgage?

(b) What is the balance due at the end of the first year?

(c) Suppose the 1-year T-Bill is at 5.875% at the index date. What is the new contract interest rate on this mortgage for the second year?

(d) What is the required monthly payment during the second year?

(e) What the contract interest rate in the third year if the T-Bill rate stays at 5.875% at the next adjustment date?

(f) What is the required monthly payment during the third year?

Reference no: EM132474020

Questions Cloud

Variance-covariance method : The market value of the first index is $7 million, and the market value of the second index is $3 million. Based on the variance-covariance method, compute:
Calculate the full absorption costs : Calculate the full absorption costs for one lot of each of the representative products as computed by the proposed cost system.
What is the initial monthly payment on mortgage : What is the initial monthly payment on this mortgage? How much will the borrower owe at the end of the 3rd year?
Compute the balance of the investment in associate account : Investor Limited acquired a 30% interest in Investee Limited for $27 000. Compute the balance of the investment in associate account
What is the initial payment on mortgage : (a) What is the initial payment on this mortgage? (b) What is the balance due at the end of the first year?
Prepare a net present value calculation for the project : Calculate the simple payback period for this project. Your desired payback period is 5 years. How long is the payback period for this project?
What are the advantages and disadvantages of liabilities : What are the advantages and disadvantages of liabilities? What are examples of each, and how would record the transactions in accounting?
Target Costing Question - What is the target cost per clock : Target Costing Question - The company requires a profit of 30 percent of selling price. What is the target cost per clock
What is the initial monthly payment on mortgage : (a) What is the initial monthly payment on this mortgage? (b) How much will the borrower owe at the end of the 3rd year?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is operating leverage and how does it affect a firms

what is operating leverage and how does it affect a firms business

  Explain which parties likely lobbied for the change from

the fasb in sfas no. 123 accounting for stock-based options encourages but does not require companies to recognize

  What is the npv of the? project

Arnold Inc. is considering a proposal to manufacture? high-end protein bars used as food supplements by body builders.

  Find the amount of the final sinking fund deposit

The total annual payments will be level at $3,300 until a final smaller annual payment suffices to pay off the loan. Find the amount of the final sinking fund deposit.

  Question regarding the beginning of humanity

Does Art Matter? Does it have any real impact, meaning, resonance, or any affect in your life, or anyone's - back to the beginning of humanity?

  What is the expected return on high flier common stock

The probability of a boom is 20 percent, of a normal economy is 70 percent, and of a recession is 10 percent. What is the expected return on High Flier's common stock?

  Office automation inc is obliged to choose between two

office automation inc. is obliged to choose between two copiers xx40 or rh45. xx40 costs less than rh45 but its

  Firm a has 10000 in assets entirely financed with equity

1. firm a has 10000 in assets entirely financed with equity. firm b also has 10000 in assets but these assets are

  Causes and effects of elf performance

Create a common-sized income statement for the three years. What conclusions can you draw from the different parts of the statement? What are the causes and effects of Elf's performance for those three years?

  Calculate the price for a bullet bond

Calculate the price on January 1st, 2018, and on January 1st, 2021, for a bullet bond issued at par on January 1st, 2018, paying a coupon once a year.

  True for the fixed income selections

The same holds true for the fixed income selections. A spreadsheet is provided in Doc Sharing to help you do the required computations.

  Price of the company stock years from now

Assume that R = 8% and Div 0 = $2.00. What ill be the price of the company's stock 3 years from now?

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