3. A mortgage has the following terms: Amount: $870,000 10 Yr T-bill Rate: 4.18% Amortization (Years): 30 Term (Years): 10 Please determine the following:

A. What is the market interest rate?

B. What type of loan is this?

C. What is the Annual Payment?

D. In preparing an Income Statement, what is the Interest Expense for years 1 5?

E. What is the Principal Balance at the end of year 8?

F. What is the value of the loan at the expiration?

G. If rates remain constant (flat), what would the benefit be to refinance this loan after year 10? Hint: Interest Expense in year 1 vs. year 10.

H. * * * EXTRA CREDIT * * * 1 Point: What is the monthly payment in year 3?