Problem $5-1$

A price level adjusted mortgage $($PLAM$)$ is made with the following terms:

Amount $=$$$95,000$

Initial interest rate $=4$ percent

Term $=30$ years

Points $=6$ percent

Payments $tobe$ reset $at$ the beginning $of$ each year.

Assuming inflation is expected to increase at the rate of $6$ percent per year for the next five years:

Required:

a$.$ Compute the payments at the beginning of each year $($BOY$).$

b$.$ Calculate the loan balance at the end of the fifth year.

c$.$ Calculate the yield to the lender.

Complete this question by entering your answers in the tabs below.

Compute the payments at the beginning of each year $($BOY$).$

Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar.