What will be the prepayment penalty if repaid in ten-years

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Reference no: EM132063909

In a commercial loan contract, the prepayment penalty follows the following schedule: 6% if the balance is >50% of the principal. 4% if the balance is between 30%-50% of the principal. 2% if the balance is between 20%-30% of the principal. 0% if the balance is< 20% of the principal. Consider a monthly amortizing loan worth $ 10 mi at 5% contract rate for a 20-year term.

• What will be the prepayment penalty if repaid in 10-years?

• What will be the prepayment penalty if repaid in 15-years?

• What will be the prepayment amount if repaid in 18-years?

Reference no: EM132063909

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