Question
A mortgage banker is originating a level-payment mortgage with the following terms: Annual interest rate:9 percent Loan term:15 years Payment frequency:monthly Loan amount:$160,000 Total up-front
A mortgage banker is originating a level-payment mortgage with the following terms:
Annual interest rate:9 percent
Loan term:15 years
Payment frequency:monthly
Loan amount:$160,000
Total up-front financing costs (including discount points): $4,000
Discount points to lender:$2,000
a. Calculate the annual percentage rate (APR) for Truth-in-Lending purposes.
b. Calculate the lender's yield with no prepayment.
c. Calculate the lender's yield with prepayment is five years.
d. Calculate the effective borrowing costs with prepayment in five years.
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
