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Suppose you take out a $ 1 1 3 , 0 0 0 , 2 0 - year mortgage loan to buy a condo. The
Suppose you take out a $year mortgage loan to buy a condo. The interest rate on the loan is To keep things simple, we will assume you make payments on the loan annually at the end of each year.
f If the inflation rate is what is the real value of the first yearend payment?
g If the inflation rate is what is the real value of the last yearend payment?
h Now assume the inflation rate is and the real interest rate on the loan is unchanged. What must be the new nominal interest rate?
i Recompute the amortization table.
i What is the real value of the first yearend payment in this highinflation scenario?
j What is the real value of the last payment in this highinflation scenario? ANSWER THESE PLEASE Note: Do not round intermediate calculations. Round your answers to decimal places.
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