Commercial Mortgage Ann buys a property that costs $1,000,000 She finances the purchase with a 70% LTV mortgage. She get

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Commercial Mortgage Ann Buys A Property That Costs 1 000 000 She Finances The Purchase With A 70 Ltv Mortgage She Get 1 (25.7 KiB) Viewed 48 times

Commercial Mortgage Ann buys a property that costs $1,000,000 She finances the purchase with a 70% LTV mortgage. She gets a 20 year interest-only fixed-rate mortgage at an annual interest rate of 5%, with annual compounding and annual payments. Ann must pay 2 points upfront in mortgage closing costs (as a % of the loan amount) The loan has a 5/4/3/2/1 prepayment penalty structure (she must pay a 5% penalty if she prepays at any time in the first year, 4% penalty in the second y etc) Suppose Ann will sell the property in 3 years, after her 3rd year's mortgage payment and pay off the balance when she sells. 16. Find the IRR of Ann's mortgage 5.69% 0 6.69% 4.69% 7.69%