A $750,000 mortgage loan is being fully amortized with level payments over 20 years has 5 years remaining. The contract interest rate is 7 percent. The borrower refinances with a 15 year, fully-amortizing wraparound loan that carries a contract interest rate of 8.25 percent. To keep the monthly payment below $3,000, over how many years must the wraparound loan be amortized? Round your answer to the nearest whole year. ANSWER: Monthly payments: Using financial calculator: PV=750000 N=20*12 I/Y=7%/12 FV=0 CPT PMT=5814.74 Loan outstanding now PMT= PV=750000 I/Y=7%/12 N=15*12 CPT FV=293656.06 Years to be amortized: PMT=3000 I/Y=8.25%/12 PV= FV=0 CPT N=163.13 The wraparound loan must be amortized over 163 months or 13 years 7 months or 14 years If the borrower negotiates the wraparound loan described above what will be the annual net cash flow to the wraparound lender (a) for the first five years of the new loan and (b) in subsequent years?