Amount = $96,100 Initial interest rate = 4 percent Term = 30 years Points = 6 percent

Payments to be reset at the beginning of each year.

Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years:

Required:

a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage?

A

	BOY Balance
Year 0
Year 1
Year 3
Year 4
Year 5

B

What is the loan balance at the end of the fifth year? (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

	Loan balance

C

What is the yield to the lender on such a mortgage?