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Posted on Jul 13, 2024

Suppose you take out a $105,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple,

Suppose you take out a $105,000, 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.

Please answer parts i-1, i-2, and J

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a. What is your annual payment on the loan? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. $ 3,425.47 Annual payment b. Construct a mortgage amortization. (Do not round Intermedlate calculations. Round your answers to 2 decimal places.) Year Beginning- of-Year Balance 1 OL 2 105,000.00 101,824.53 98.400.28 94,989.33 3 4 5 ON 6 91,313.32 87,453.51 83,400.72 79.145.28 7 8 Answer is complete but not entirely correct. Year-End Interest Year-End Amortization End-of- Due Payment of Loan Year on Balance Balance 5,250.00 8.425.47 3,175.47 101,824.53 5,091.23 8,425.47 3,334.25 98,490.28 4,924.51 8.425.47 3,500.00 94,989.33 4,749.47 8,425.47 3,676.01 91,313.32 4,565.67 8.425.47 3,859.81 87,453.51 4,372.68 8,425.47 4,052.80 83,400.72 4,170.04 8.425.47 X 4,255.44 79.145.28 3,957.26 8,425.47 4,488.21 74,677.08 3,733.85 8,425.47 4.691.62 89.985.46 3,499.27 8.425.47 4.928.20 65,059.26 3,252.96 8,425.47 5,172.51 59.888.75 2.994.34 8.425.47 5.431.13 54,455.62 2.722.78 8,425.47 5,702.69 48.752.93 2,437.65 8.425.47 5.987.83 42.765.10 2.138.25 8,425.47 6.287.22 36,477.88 1.823.89 8.425.47 6.601.58 29.876.31 1,493.82 8,425.47 6,931.66 22,944.65 1,147.23 8.425.47 7.278.24 15,666.41 783.32 8,425.47 7.642.15 8.024.26 401.21 8,425.47 8.024.26 0.00 9 10 11 OOO OOO OOO 12 13 14 74,677.08 69.985.46 65,059.26 59,886.75 54,455.62 48.752.93 42,765.10 36,477.88 29,876.31 22.944.65 15 > 16 0 17 OOOOOO OOOOOO 18 19 15,666.41 8.024.26 20 c. What fraction of your initial loan payment is interest? (Do not round intermediate calculations. Enter your answers as a whole percent.) Answer is complete and correct. Initial interest 62 % d. What fraction of your initial loan payment is amortization? (Do not round intermediate calculations. Enter your answers as a whole percent.) Answer is complete and correct. Amortization 38% e. What fraction of the loan has been paid off after 10 years (halfway through the life of the loan)? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Paid off loan f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the first payment g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the last 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? (Do not round intermediate calculations. Enter your answers as a whole percent.) New nominal interest rate % i-1. Recompute the amortization table. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Beginning-of- Year Balance Year-End Interest Due on Balance Year-End Payment Amortization End-of-Year of Loan Balance 1 2 2 4 5 6 7 Coo 10 11 12 13 14 15 16 17 18 19 20 1-2. What is the real value of the first (year-end) payment in this high-inflation scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the first payment j. What is the real value of the last payment in this high-inflation scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the last payment a. What is your annual payment on the loan? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. $ 3,425.47 Annual payment b. Construct a mortgage amortization. (Do not round Intermedlate calculations. Round your answers to 2 decimal places.) Year Beginning- of-Year Balance 1 OL 2 105,000.00 101,824.53 98.400.28 94,989.33 3 4 5 ON 6 91,313.32 87,453.51 83,400.72 79.145.28 7 8 Answer is complete but not entirely correct. Year-End Interest Year-End Amortization End-of- Due Payment of Loan Year on Balance Balance 5,250.00 8.425.47 3,175.47 101,824.53 5,091.23 8,425.47 3,334.25 98,490.28 4,924.51 8.425.47 3,500.00 94,989.33 4,749.47 8,425.47 3,676.01 91,313.32 4,565.67 8.425.47 3,859.81 87,453.51 4,372.68 8,425.47 4,052.80 83,400.72 4,170.04 8.425.47 X 4,255.44 79.145.28 3,957.26 8,425.47 4,488.21 74,677.08 3,733.85 8,425.47 4.691.62 89.985.46 3,499.27 8.425.47 4.928.20 65,059.26 3,252.96 8,425.47 5,172.51 59.888.75 2.994.34 8.425.47 5.431.13 54,455.62 2.722.78 8,425.47 5,702.69 48.752.93 2,437.65 8.425.47 5.987.83 42.765.10 2.138.25 8,425.47 6.287.22 36,477.88 1.823.89 8.425.47 6.601.58 29.876.31 1,493.82 8,425.47 6,931.66 22,944.65 1,147.23 8.425.47 7.278.24 15,666.41 783.32 8,425.47 7.642.15 8.024.26 401.21 8,425.47 8.024.26 0.00 9 10 11 OOO OOO OOO 12 13 14 74,677.08 69.985.46 65,059.26 59,886.75 54,455.62 48.752.93 42,765.10 36,477.88 29,876.31 22.944.65 15 > 16 0 17 OOOOOO OOOOOO 18 19 15,666.41 8.024.26 20 c. What fraction of your initial loan payment is interest? (Do not round intermediate calculations. Enter your answers as a whole percent.) Answer is complete and correct. Initial interest 62 % d. What fraction of your initial loan payment is amortization? (Do not round intermediate calculations. Enter your answers as a whole percent.) Answer is complete and correct. Amortization 38% e. What fraction of the loan has been paid off after 10 years (halfway through the life of the loan)? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Paid off loan f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the first payment g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the last 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? (Do not round intermediate calculations. Enter your answers as a whole percent.) New nominal interest rate % i-1. Recompute the amortization table. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Beginning-of- Year Balance Year-End Interest Due on Balance Year-End Payment Amortization End-of-Year of Loan Balance 1 2 2 4 5 6 7 Coo 10 11 12 13 14 15 16 17 18 19 20 1-2. What is the real value of the first (year-end) payment in this high-inflation scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the first payment j. What is the real value of the last payment in this high-inflation scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value of the last payment