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3. Roger Oviatt signs a 30-year mortgage loan for $450,000 at an interest rate of 5%. The loan has 4 points payable upfront, and a
3. Roger Oviatt signs a 30-year mortgage loan for $450,000 at an interest rate of 5%. The loan has 4 points payable upfront, and a pre-payment penalty of 2% of the outstanding loan amount if the loan is terminated sooner than 10 years.
- Compute the Effective Annual Rate for the loan if Roger holds on the property/Loan for 30 years
- Compute the Effective Annual Rate for the loan if Roger holds on the property/Loan for 5 years
Comments: Problem 3 is excel-centric. My hope is that you will understand different types of constant payment loans as discussed in chapter 4 of the textbook and learn the relationship amongst various loan elements; and in the process, also become more proficient in Excel
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