An interest-only mortgage is made for $98,000 at 6 percent interest for 10 years. The lender and borrower agree that mon
Posted: Sun Jun 05, 2022 7:10 am
An interest-only mortgage is made for $98,000 at 6 percent
interest for 10 years. The lender and borrower agree that monthly
payments will be constant and will
require no loan amortization.
Required:
a. What will the monthly payments be?
b. What will be the loan balance after
five years?
c. If the loan is repaid after five years,
what will be the yield to the lender?
d. Instead of being repaid after five
years, what will be the yield if the loan is repaid after 10
years?
interest for 10 years. The lender and borrower agree that monthly
payments will be constant and will
require no loan amortization.
Required:
a. What will the monthly payments be?
b. What will be the loan balance after
five years?
c. If the loan is repaid after five years,
what will be the yield to the lender?
d. Instead of being repaid after five
years, what will be the yield if the loan is repaid after 10
years?