1 Ann wants to buy an office building which costs $2,000,000. She obtains a 30 y
ID: 2801031 • Letter: 1
Question
1
Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. How much is Ann’s monthly payment?
A: $7,638.64
2
Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment?
ANSWER: $1,447,160.21
3
Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year Interest Only fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. How much is Ann’s monthly payment?
A: $5,333.33
4
Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year partially amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments.
The payment on the loan is $6,000 per month. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment?
ANSWER: -$1,555,800.68
5
Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments.
The mortgage has a 2% prepayment penalty if the borrower prepays in the first 5 years. Suppose Ann makes the required monthly payment for 3 years and prepays after her final monthly payment at the end of 3 years. What is the annual IRR on Ann’s mortgage?
ANSWER: 4.60%
The Answers are given. I need help solving them using calculator solution. No Excel solutions please.
Explanation / Answer
1) cost of building = c = $2,000,000
Value of loan = l = c*LTV = 2,000,000*0.80 = 1,600,000
annual interest rate , r = 4% = 0.04
monthly interest rate , i = r/12 = 0.04/12 = 0.003333
no. of months in the loan period , n = loan period*12 = 30*12 = 360
present value interest rate factor of annuity (PVIFA) = ((1+i)n-1)/((1+i)n*i)
=((1.003333)360-1)/((1.003333)360*0.003333) = 209.46124045
monthly payments = l/PVIFA = 1,600,000/209.46124045 = $7638.644727 or $7638.64 ( rounding off to 2 decimal places)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.