Problem 5-47 Amortizing Loans and Inflation (LO3) Suppese you take out a 5111000,20 -year morfgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple. we Wif assume you make payments on the foan annisally at the end of eoch year, a. What is your anitual payment on the loan? b. Construct a mortpage amorization. c. What fraction of your initial loan payment is interest? d. What fraction of your intial loan poyment is amorization? e. What is the total of the loen amount paid off afee 10 years chaifway through the lite of the loast? 1. l the infotion rate is 3k, what is the real value of the first fyear-end; payment? 9. If the intlation rate is 3N, what is the real value of the last frear-ench popment? H. Now assume the inflation rate is 6% and the reat inserest rate on the loan is unchanged Wrat must toe the new nommat interest. tate? 14. Recomprite the amorization table. 1-2. What w the real value of the first igear-end payment in this high-infacion scensio? 1. What in the real value of the lat payment in this hightifistion acenario? What ke your annual payment wen the had? Problem 5-47 Amortizing Loans and Inflation (LO3) Suppose you take out a $111,000,20 year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. 0. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? 9. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this highinflation scenario? 1. What is the real value of the last payment in this high-inflation scenario? Complete this question by entering your answers in the tabs below. What is your annual payment on the toan? Note: Da not round intermediate calculations, Round your answer to 2 dedmal places. Problem 5-47 Amortizing Loans and Inflation (LO3) Suppese you take out a 5111000,20 -year morfgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple. we Wif assume you make payments on the foan annisally at the end of eoch year, a. What is your anitual payment on the loan? b. Construct a mortpage amorization. c. What fraction of your initial loan payment is interest? d. What fraction of your intial loan poyment is amorization? e. What is the total of the loen amount paid off afee 10 years chaifway through the lite of the loast? 1. l the infotion rate is 3k, what is the real value of the first fyear-end; payment? 9. If the intlation rate is 3N, what is the real value of the last frear-ench popment? H. Now assume the inflation rate is 6% and the reat inserest rate on the loan is unchanged Wrat must toe the new nommat interest. tate? 14. Recomprite the amorization table. 1-2. What w the real value of the first igear-end payment in this high-infacion scensio? 1. What in the real value of the lat payment in this hightifistion acenario? What ke your annual payment wen the had? Problem 5-47 Amortizing Loans and Inflation (LO3) Suppose you take out a $111,000,20 year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. 0. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? 9. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this highinflation scenario? 1. What is the real value of the last payment in this high-inflation scenario? Complete this question by entering your answers in the tabs below. What is your annual payment on the toan? Note: Da not round intermediate calculations, Round your answer to 2 dedmal places
