1. Consider the following fixed-rate, level-payment mortgage: Maturity = 360 months

Amount borrowed = $100,000

Annual mortgage rate = 10%

a. Construct an amortization schedule for the first 10 months. (Do it in Excel)

b. What will the mortgage balance at the end of the 360th month, assuming no

prepayment?

c. Without constructing an amortization schedule, what is the mortgage balance at

the end of month 270 assuming no prepayment? (You may work with your group on this question)

KEY:

Keys: a. Month Ending Mortgage Balance $99,955.76 2 $99,911.15 3 $99,866.18 $99,820.82 $99,775.09 YOUA $99,728.98 $99,682.48 $99,635.60 $99,588.32 10 $99,540.65 b. 0 c. beginning balance = 55,821.79; ending balance = 55,409.40\fBond equivalent yield = 5.437% when the house price stays the same after 30 years.