Question $4$

Create a schedule of predicted cash flow for the following pass$-$through.

Mortgage pool: $$5$ million

All mortgages are FRM at $10\%$ per year, $5-$year maturity, yearly payment

Pass$-$through: $$5$ million, yearly payment

Fee payment: $0\mathrm{.}5\%$ of outstanding balance

Assume prepayment rate: $0\mathrm{.}5\%$ of the mortgage pool for the $1^{st}$ year, $1\%$ for the $2^{nd}$ year, and $1\mathrm{.}25\%$ for the remaining years

What is the value of this pass$-$through at $8\%$ discount rate?

$\backslash$table$[[$Year$,\backslash$table$[[$Beginning$],[$balance$]],\backslash$table$[[$Mortgage$],[$payment$]],\backslash$table$[[$Interest$],[$payment$]],\backslash$table$[[$Principal$],[$payment$]],\backslash$table$[[$Pre$-],[$payment$]],\backslash$table$[[$Fee$],[$payment$]],\backslash$table$[[$Payment to$],[$investors$]],\backslash$table$[[$Ending$],[$balance$]]],[1,,,,,,,,],[2,,,,,,,,],[4,,,,,,,,],[5,,,,,,,,]]$