FIN 3352 Valuation of Mortgages November 21, 2019 From the Borrowers Perspective: Consider a $542,000, 7.42%, 30 year mortgage that was originated 30 years ago. Except for three curtailments at the end of months 142, 152, and 162, the borrower made all payments according to schedule until the mortgage was prepaid in full at the end of year 25. Oddly, the curtailment at the end of month 142 happened to equal (to the closest penny) the interest paid during year 1. Furthermore, the curtailment made at the end of month 152 happened to equal (to the closest penny) the principal paid during months 19-31. Moreover, the curtailment made at the end of month 162 happened to equal (to the closest penny) the interest paid during months 155 to 160. From the Lenders Perspective: The mortgage lender originated the mortgage described above and sold the mortgage to a mortgage investor at the end of month 132. From Investor #1s Perspective: Investor #1 purchased the mortgage described above at the end of month 132 from the lender and sold the mortgage to Investor #2 at the end of month 232. At the time Investor #1 purchased the mortgage, Investor #1 expected to receive all regularly scheduled payments until the end of year 22, at which time Investor #1 expected the mortgage to prepay in full. Investor #1s expected rate of return at the time of purchase was 6.42%. From Investor #2s Perspective: Investor #2 purchased the mortgage described above at the end of month 232 from Investor #1 and held the mortgage until it prepaid. At the time Investor #2 purchased the mortgage, Investor #2 expected to receive all regularly schedule payments until the end of year 25, at which time Investor #2 expected the mortgage to prepay in full. Investor #2s expected rate of return at the time of purchase was 6.42% What was the borrowers effective borrowing rate? What was the amount of curtailment at the end of month 142? What was the amount of curtailment at the end of month 152? What was the amount of curtailment at the end of month 162? What was the lenders actual rate of return? What was Investor #1s actual rate of return? What was Investor #2s actual rate of return? please provide step by step and key strokes thank you!!!