Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following amortization table for a 4 year fully amortizing fixed rate mortgages with 9% interest, annual payments, and a starting balance of $5

Consider the following amortization table for a 4 year fully amortizing fixed rate mortgages with 9% interest, annual payments, and a starting balance of $5 million. The prepayment assumption is 4% CPR and there is no servicing fee. A CMO is issued with an IO and a PO tranche. How much do PO intestors expect to receive in the first year? Round your answer to two decimal points (e.g. if your answer is $1,234,435.66666 write 1234435.67).

image text in transcribed

LOAN SCHEDULE FOR MORTGAGE POOL Year Beg. Bal Prepayment Sch. Payment Sch. Interest Sch. Principal End Bal 1 $ 2 $ 3 $ 4 $ 5,000,000 $ 3,706,657 $ 2,427,657 $ 1,168,992 $ 200,000 $ 1,543,343 $ 450,000 $ 1,093,343 $ 3,706,657 148,266 $ 1,464,332 $ 333,599 $ 1,130,733 $ 2,427,657 97,106 $ 1,380,048 $ 218,489 $ 1,161,558 $ 1,168,992 $ 1,274,202 $ 105,209 $ 1,168,992 $ 0 LOAN SCHEDULE FOR MORTGAGE POOL Year Beg. Bal Prepayment Sch. Payment Sch. Interest Sch. Principal End Bal 1 $ 2 $ 3 $ 4 $ 5,000,000 $ 3,706,657 $ 2,427,657 $ 1,168,992 $ 200,000 $ 1,543,343 $ 450,000 $ 1,093,343 $ 3,706,657 148,266 $ 1,464,332 $ 333,599 $ 1,130,733 $ 2,427,657 97,106 $ 1,380,048 $ 218,489 $ 1,161,558 $ 1,168,992 $ 1,274,202 $ 105,209 $ 1,168,992 $ 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting The Impact On Decision Makers

Authors: Gary A Porter, Curtis L Norton

7th Edition

1439080526, 9781439080528

More Books

Students also viewed these Finance questions

Question

600 lb 20 0.5 ft 30 30 5 ft

Answered: 1 week ago