Question
Can you please help with this problem. Sharonborrows an adjustable rate loan (ARM)of $100,000 with 3 yearloanmaturity.The initial interest rate for the loanis 8.5%, the
Can you please help with this problem.
Sharonborrows an adjustable rate loan (ARM)of $100,000 with 3 yearloanmaturity.The initial interest rate for the loanis 8.5%, the margin is 3%, the loan amortization period is 15 years, the frequency of adjustment is 1 year (monthly compounding), no interest rate cap or payment cap. There will be adiscount point of3% for the loan. Also,the index rates for the next 2 years are 11% and 8%, respectively. What will be the effective mortgage yield for borrowing this loan?
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Survey Of Economics, Principles, Applications, And Tools
Authors: Arthur O'Sullivan, Steven M. Sheffrin, Stephen J. Perez
5th Edition
0132556073, 978-0132556071
