Question
An interest-only mortgage is made for $83,000 at 6 percent interest for 10 years. The lender and borrower agree that monthly payments will be constant
An interest-only mortgage is made for $83,000 at 6 percent interest for 10 years. The lender and borrower agree that monthly payments will be constant and will require no loan amortization.
a. What will the monthly payments be?
b. What will be the loan balance after five years?
c. If the loan is repaid after five years, what will be the yield to the lender?
d. Instead of being repaid after five years, what will be the yield if the loan is repaid after 10 years?
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An Introduction to Investment Banks, Hedge Funds, and Private Equity
Authors: David P. Stowell
1st edition
978-0123745033, 0123745039, 978-9380931074
