You have just obtained a commercial mortgage for $4.375M with a 5-year term, 25-year amortization period and 4.25% mortgage interest rate. 1

(a) Construct an amortization table for the term of the loan assuming annual payments. What is the annual payment? What is the balance at maturity?

(b) What is the eective cost of borrowing if the borrower pays an origination fee of $30,000?

(c) The borrower can repay the balance of the loan at any time prior to its maturity, but must pay a penalty of 5% of the outstanding balance. What is the cost of borrowing if the borrower pays an origination fee of $30,000 and pays o the remaining balance of the loan after making payments for 4 years?