Question
Consider a 25-year $200,000 5/1 ARM having a 2.7% margin and based on the CMTindex. Suppose the interest rate is initially 6% and the value
Consider a 25-year $200,000 5/1 ARM having a 2.7% margin and based on the CMTindex. Suppose the interest rate is initially 6% and the value of the CMT is 5.7% five years later. Assume that all interest rates use monthly compounding.
(a)Calculate the monthly payment for the first five years.
(b)Calculate the unpaid balance at the end of the first five years.
(c)Calculate the monthly payment for the 6th year.
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley
12th Edition
1439044473, 978-1439044476
