(Please show formula you use)

1. [20] A constant payment mortgage for $300,000 is to be made for 30 years at an MEY of 6%. All payments are monthly.

A. [2] What are the payments if the loan is fully amortizing?

B. [2] If the payments for the loan are 1,400, what is the balloon payment due at maturity? What type of loan is this?

C. [2] What will the loan balance be after 7 years, if the loan is fully amortizing and payments are made according to schedule?

D. [4] If the lender charges 2 points to close the loan, what is the APR of the loan if it is fully amortizing?

E. [4] The lender charges 2 points in upfront fees and the loan is fully amortizing. If the borrower repays the loan after 7 years (having made only scheduled payments) and owes a prepayment penalty of 2% of outstanding principal, what is the effective cost of the loan?

F. [6] The loan is fully amortizing, the lender charges 2 pointsupfront, and the borrower expects to terminate the loan after 7 years, and will owe a 2% penalty. As an alternative, the lender offers the same terms, but will reduce the contract rate by 25bps if the borrower prepays an additional 1 point. Which product should the borrower choose?