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6. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial

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6. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basis points above 1 life of the loan. Compute the true APR for this loan. 4.20% 7. In Q6, compute the IRR for this loan assuming Tim will prepay in 5 years

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