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The Johnson S&L originated a pool containing 100 three-year fixed interest rate mortgages with an average balance of $50,000 each. All mortgages in the pool
The Johnson S&L originated a pool containing 100 three-year fixed interest rate mortgages with an average balance of $50,000 each. All mortgages in the pool carry a coupon of 10%. (For simplicity, assume that all mortgage payments are made annually at 10% pooled mortgage interest rate). Johnson would now like to sell the pool to FNMA. Assuming a constant annual prepayment rate of 8% (for simplicity, assume that prepayments are based on the pool balance at the end of the preceding year and begin at the end of year 1). what is the price that Johnson could obtain if market interest rates were 9%? (round your final answer to a whole number) End of Year Pool Balance Principal Due to Prepayment Principal and Interest Payments Total Principal and Interest Pool Factor 0 $5.000.000 SO $O $0 1.0000 1 2 3 SO SO 0.0000
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