Number 5

Assignment #5: Mortgage Calculations Due Thursday November 8 (in class) Valuing a Series of Loan Payments: question 1: What would the value of 360 payments of $1,000 per month be to a lender/investor who can earn 6% (or 0.5% per month) on other investments with similar risk? Calculating the payment on a loan: Question 2: A borrower wants to take a 30 year fixed rate mortgage for $166,791.61 with monthly payments. If the interest rate on these loans is 6% annually (compounded monthly), what is the monthly payment? Question 3: Suppose the borrower is thinking about paying off his loan quicker, so he wants to know what the payment would be on a 15 year with a 6% interest rate, what would the payment be on loan amount of $100,000? Finding the remaining mortgage balance (RMB Question 4: Suppose a borrower takes out a 6%, $100,000 loan, amortized over 15 years (with monthly payments). What is the RMB of the mortgage after one month? After two months? Question 5: For a loan of S 100,000, at 7% (annual) interest for 30 years with monthly payments, what will be the balance of the loan at the end of four years? Question 6: Suppose that you borrowed $200,000 in the form of a 30-year fixed-rate mortgage with an annual interest rate of 6% with monthly payments and monthly compounding. i. What will your monthly payment be for this loan? i How much will you still owe at the end of the 15th year? ii. How much of the 1" payment will consist of principal