Year Beg. Bal Payment Interest Principal End Bal 1 $112,500.00 $18,308.86 11,250
ID: 2709217 • Letter: Y
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
$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.
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
$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
Explanation / Answer
Answer:
Year Beg. Bal Payment Interest Principal End Bal Prepayment rate 1 $112,500.00 $18,308.86 11,250.00 $18,308.86 $94,191.14 $7,058.86 6.274542222 2 94,191.14 $16,355.40 9,419.11 $16,355.40 $77,835.74 $6,936.29 7.364057808 3 77,835.74 $14,589.84 7,783.57 $14,589.84 $63,245.90 $6,806.27 8.744401993 4 63,245.90 $12,991.06 6,324.59 $12,991.06 $50,254.84 $6,666.47 10.54055678 5 50,254.84 $11,538.88 5,025.48 $11,538.88 $38,715.96 $6,513.40 12.96074169 6 38,715.96 $10,213.17 3,871.60 $10,213.17 $28,502.79 $6,341.57 16.37973074 7 28,502.79 $8,991.80 2,850.28 $8,991.80 $19,510.99 $6,141.52 21.54708364 8 19,510.99 $7,845.66 1,951.10 $7,845.66 $11,665.33 $5,894.56 30.21148594 9 11,665.33 $6,721.45 1,166.53 $6,721.45 $4,943.88 $5,554.92 47.61905578 10 4,943.88 $5,438.27 494.39 $4,943.88 $0.00 $4,943.88 100Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.