Question
1.Suppose your monthly mortgage payment is $2000; the stated annual interest rate is 4%; and you have 240 monthly payments remaining on your mortgage. What
1.Suppose your monthly mortgage payment is $2000; the stated annual interest rate is 4%; and you have 240 monthly payments remaining on your mortgage.
What is the PV of the remaining mortgage payments?
You can skip the next five mortgage payments. These skipped payments do not need to be repaid.What is the PV of your mortgage payments now?
Now suppose that the five skipped mortgage payments do need to be repaid (as a lump sum) with interest at the conclusion of your loan. What is the PV of this stream of cash flows?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
