Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Recompute the amortization table. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Leave no cells blank - be certain to

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed Recompute the amortization table. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Leave no cells blank - be certain to enter " 0 " wherever renuired. Fnter all values as nositive value. Construct a mortgage amortization. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Leave n i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last payment in this high-inflation scenario? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Suppose you take out a $101,000,20-year mortgage loan to buy a condo. The interest rate on the loan is 4%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. 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 1%, what is the real value of the first (year-end) payment? g. If the inflation rate is 1%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 7% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last payment in this high-inflation scenario? What is your annual payment on the loan? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Now assume the inflation rate is 7% and the real interest rate on the loan is unchanged. What must be the nominal interest rate? Note: Do not round intermediate calculations. Enter your answer as a whole percent. 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 1%, what is the real value of the first (year-end) payment? g. If the inflation rate is 1%, what is the real value of the last (year-end) payment? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? Note: Do not round intermediate calculations. Enter your answers as a w

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions