Solution-Compute the payment at the beginning of each year

Compute the payment at the beginning of each year

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Reference no: EM132789212

A price level adjusted mortgage (PLAM) is made with the following terms:

Amount = $95000

Initial interest rate = 4 percent

Term = 30 years

Points = 6 percent

Payments to be reset at the beginning of each year.

Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years:

Problem a. compute the payment at the beginning of each year (BOY)

Problem b. what is the loan balance at the end of the fifth year?

Problem c. what is the yield to the lender on such a mortgage?

Reference no: EM132789212

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Compute the payment at the beginning of each year

Reference no: EM132789212

Reference no: EM132789212

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