Question
Year Beg. Bal Payment Interest Principal End Bal 1 $112,500.00 $18,308.86 11,250.00 $18,308.86 $94,191.14 2 94,191.14 $16,355.40 9,419.11 $16,355.40 $77,835.74 3 77,835.74 $14,589.84 7,783.57 $14,589.84
| Year | Beg. Bal | Payment | Interest | Principal | End Bal |
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| 1 | $112,500.00 | $18,308.86 | 11,250.00 | $18,308.86 | $94,191.14 |
| 2 | 94,191.14 | $16,355.40 | 9,419.11 | $16,355.40 | $77,835.74 |
| 3 | 77,835.74 | $14,589.84 | 7,783.57 | $14,589.84 | $63,245.90 |
| 4 | 63,245.90 | $12,991.06 | 6,324.59 | $12,991.06 | $50,254.84 |
| 5 | 50,254.84 | $11,538.88 | 5,025.48 | $11,538.88 | $38,715.96 |
| 6 | 38,715.96 | $10,213.17 | 3,871.60 | $10,213.17 | $28,502.79 |
| 7 | 28,502.79 | $8,991.80 | 2,850.28 | $8,991.80 | $19,510.99 |
| 8 | 19,510.99 | $7,845.66 | 1,951.10 | $7,845.66 | $11,665.33 |
| 9 | 11,665.33 | $6,721.45 | 1,166.53 | $6,721.45 | $4,943.88 |
| 10 | 4,943.88 | $5,438.27 | 494.39 | $4,943.88 | $0.00 |
Given this stream of projected cash flows on a MBS, what rate of prepayment is assumed? State your answer as a percentage (e.g. 20.1%)
The coupon rate on the pool is 10%, payments are annual, and the column label "principal" includes both regularly scheduled prinicpal payments and prepayments.
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