bank offers an interest-only loan wit Christie begins mortgage. The loan would be repaid installments. Because of the previous relations ween S&S Air and the bank there would be no closing costs for the loan Christie states that the APR of the loan would be 61 percent Todd asks if a shorter mort gage loan is available. Christie says that the bank does have a 20 year mortgage available at the same APR Mark decides to ask Christie about a "smart loan" he discussed with a mortgage broker when he was refinanc- ing his home loan. A smart loan works as follows: Every two weeks a mortgage payment is made that is exactly one half of the traditional monthly mortgage payment. Christie Informs him that the bank does have smart loans. The APR of the smart loan would be the same as the APR of the traditional loan. Mark nods his head. He then states if this loan is available Christie says that the bank offers an inte a term of 10 years and an APR Of 3.5 percent. She to further explain the terms. The company wou sponsible for making interest payments each mont amount borrowed. No principal payments are res the end of the 10-year term, the company would $35 million. However, the company can make payments at any time. The principal payr percent. She goes on ny would be re- ach month on the nents are required. As would repay the y can make principal be. Principal pay pal of the loan and reduce d with Christie's answers, time. The principal payments would work just like those on a traditional mortgage. Principa ments would reduce the principal of the loan and the interest due on the next payment. Mark and Todd are satisfied with Christie's ans but they are still unsure of which loan they should choose. They have asked Chris to answer the following questions to help them choose the correct morta this is the best mortgage option available to the company because it saves interest payments. Christie agrees with Mark, but then suggests that a et loan or balloon payment, would result in the QUESTIONS 1 What are the monthly payments for a 30-year tra- ditional mortgage? What are the payments for a 20-year traditional mortgage? 2. Prepare an amortization table for the first six months of the traditional 30-year mortgage. How much of the first payment goes toward principal? How long would it take for 3&5 Air to pay off the smart loan assuming 30-year traditional mortgage payments? Why is this shorter than the time needed to pay off the traditional mortgage? How much interest would the company save? 4. Assume S&S Air takes out a bullet loan under the terms described. What are the payments on the loan? 5. What are the payments for the interest-only lo 6. Which mortgage is the best for the company there any potential risks in this action? bank offers an interest-only loan wit Christie begins mortgage. The loan would be repaid installments. Because of the previous relations ween S&S Air and the bank there would be no closing costs for the loan Christie states that the APR of the loan would be 61 percent Todd asks if a shorter mort gage loan is available. Christie says that the bank does have a 20 year mortgage available at the same APR Mark decides to ask Christie about a "smart loan" he discussed with a mortgage broker when he was refinanc- ing his home loan. A smart loan works as follows: Every two weeks a mortgage payment is made that is exactly one half of the traditional monthly mortgage payment. Christie Informs him that the bank does have smart loans. The APR of the smart loan would be the same as the APR of the traditional loan. Mark nods his head. He then states if this loan is available Christie says that the bank offers an inte a term of 10 years and an APR Of 3.5 percent. She to further explain the terms. The company wou sponsible for making interest payments each mont amount borrowed. No principal payments are res the end of the 10-year term, the company would $35 million. However, the company can make payments at any time. The principal payr percent. She goes on ny would be re- ach month on the nents are required. As would repay the y can make principal be. Principal pay pal of the loan and reduce d with Christie's answers, time. The principal payments would work just like those on a traditional mortgage. Principa ments would reduce the principal of the loan and the interest due on the next payment. Mark and Todd are satisfied with Christie's ans but they are still unsure of which loan they should choose. They have asked Chris to answer the following questions to help them choose the correct morta this is the best mortgage option available to the company because it saves interest payments. Christie agrees with Mark, but then suggests that a et loan or balloon payment, would result in the QUESTIONS 1 What are the monthly payments for a 30-year tra- ditional mortgage? What are the payments for a 20-year traditional mortgage? 2. Prepare an amortization table for the first six months of the traditional 30-year mortgage. How much of the first payment goes toward principal? How long would it take for 3&5 Air to pay off the smart loan assuming 30-year traditional mortgage payments? Why is this shorter than the time needed to pay off the traditional mortgage? How much interest would the company save? 4. Assume S&S Air takes out a bullet loan under the terms described. What are the payments on the loan? 5. What are the payments for the interest-only lo 6. Which mortgage is the best for the company there any potential risks in this action