I do not own rights to the pictures below. ONLY QUESTION 3 PLEASE
PENDING Tow Townhome $335,000 Est. $1K/mo $3 2b 2 bed 2.5 bath 1,376 sqft 400 E Guenther St Unit 3103, San Antonio, TX 78210 40C LIST Email Agent You purchase the townhome listed above at realtor.com and borrow 95% of the listed price from Broadway Bank at an APR of 6% with monthly payments (your down payment is 5% of listed price). The maturity of your mortgage equals 30 years with monthly payments. a. Draw a time line that depicts the cash flows from the mortgage payments- compute the payment and show your inputs and work. b. Compute the outstanding mortgage amount after you have made 15 years of payments. Show this point on the time line, and ii. give the inputs to your computations for full credit. c. What is the interest and principal component of the next mortgage payment after making payments for: 5 years, 15 years and 25 years. i. Question 3 (10 points, Chapter 5): Term Structure and Cost of Capital Draw the current term structure of interest rates (as of today). Label both the axes and the points on the curve. You can get this information from Bloomberg.com. Also include the term structure in early 1980s and early 1990s. You can get this information from the web or from your book. Explain in less than 10 lines What does the current term structure, as you have graphed, imply for the future path of future interest rates? What causes the future change in rates in your opinion? Why was the term structure different in the 1980s? Why is the term structure important for valuing financial asset prices? . . . PENDING Tow Townhome $335,000 Est. $1K/mo $3 2b 2 bed 2.5 bath 1,376 sqft 400 E Guenther St Unit 3103, San Antonio, TX 78210 40C LIST Email Agent You purchase the townhome listed above at realtor.com and borrow 95% of the listed price from Broadway Bank at an APR of 6% with monthly payments (your down payment is 5% of listed price). The maturity of your mortgage equals 30 years with monthly payments. a. Draw a time line that depicts the cash flows from the mortgage payments- compute the payment and show your inputs and work. b. Compute the outstanding mortgage amount after you have made 15 years of payments. Show this point on the time line, and ii. give the inputs to your computations for full credit. c. What is the interest and principal component of the next mortgage payment after making payments for: 5 years, 15 years and 25 years. i. Question 3 (10 points, Chapter 5): Term Structure and Cost of Capital Draw the current term structure of interest rates (as of today). Label both the axes and the points on the curve. You can get this information from Bloomberg.com. Also include the term structure in early 1980s and early 1990s. You can get this information from the web or from your book. Explain in less than 10 lines What does the current term structure, as you have graphed, imply for the future path of future interest rates? What causes the future change in rates in your opinion? Why was the term structure different in the 1980s? Why is the term structure important for valuing financial asset prices
