7 only

IO & PO strips BOA originates 100 Fully Amortizing Fixed Rate Mortgages, each has a $1,000 balance, 5% interest rate (no fees), 25-year term, and annual payments. BOA immediately issues 10 and PO strips backed by the pool of these mortgages and sells them to investors who discount payoffs at 4%. Hint: use the Prepay.xlsx file on Blackboard, especially the last year's HW7 example. 6. What profits does BOA make immediately? (the answer will be a few thousand dollars) 7. What is the value of all PO strips