A lender has outlined key terms for a 4-year annuity balloon mortgage at a fixed interest rate including the credit margin of 5.50%, with a maximum loan-to-value (LTV) ratio of 55% amortised over 20 years. The property is in a good but not prime location. It is fully leased to a range of mainly good credit rated tenants. Leases have between 3 years and 7 years remaining and all have internal repairing only clauses with annual escalation to CPI. Year 0 Year 1 Year 2 Year 3 Year 4 Market Value -25.000 Transaction costs @ 6.80% -1.700 Purchase cost -26.700 Net Income Capex @ 10.00% Sale incl'g costs 2.250 2.340 2.434 2.531 -0.225 -0.234 -0.243 -0.253 29.246 Net Cash Flows Figures shown in £millions. -26.700 2.025 2.106 2.190 31.524 Set out the line by line After Debt Cash Flow, based on the details above and whatever further reasonable and fully justified assumptions you feel are necessary. The borrower only invests in property that can achieve an after debt annual return of 14.00% or above and an average forecasted cash-on-cash of 7.50%. Show your detailed calculations and comment on whether this project is capable of meeting these criteria?

A lender has outlined key terms for a 4-year annuity balloon mortgage at a fixed interest rate including the credit margin of 5.50%, with a maximum loan-to-value (LTV) ratio of 55% amortised over 20 years. The property is in a good but not prime location. It is fully leased to a range of mainly good credit rated tenants. Leases have between 3 years and 7 years remaining and all have internal repairing only clauses with annual escalation to CPI. Year 0 Year 1 Year 2 Year 3 Year 4 Market Value -25.000 Transaction costs @ 6.80% -1.700 Purchase cost -26.700 Net Income Capex @ 10.00% Sale incl'g costs 2.250 2.340 2.434 2.531 -0.225 -0.234 -0.243 -0.253 29.246 Net Cash Flows Figures shown in £millions. -26.700 2.025 2.106 2.190 31.524 Set out the line by line After Debt Cash Flow, based on the details above and whatever further reasonable and fully justified assumptions you feel are necessary. The borrower only invests in property that can achieve an after debt annual return of 14.00% or above and an average forecasted cash-on-cash of 7.50%. Show your detailed calculations and comment on whether this project is capable of meeting these criteria?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a property. The borrower anticipates owning the property for five years. The lender first offers a $157,000, 30-year fully amortizing ARM with the following terms: Initial interest rate=6 percent Index=1-year Treasuries Payments reset each year d Margin-2 percent Interest rate cap = None Payment cap None Negative amortization Not allowed Discount points=2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY)2=7 percent; (BOY) 3=8.5 percent; (BOY) 4-9.5 percent; (BOY) 5-11 percent. Required: a. Compute the payments and loan balances for the unrestricted ARM for the five-year period. b. Compute the yield for the unrestricted ARM for the five-year period. Complete this question by entering your answers in the tabs below. Required A Required B Compute the yield for the unrestricted ARM for the five-year period.…
ABC mortgage is to obtain a facility amounting to $200000 to be repaid over a period of 20 years at an annual rate of 10%.Help the company to; 1. Compute monthly mortgage payment for this loan 2. Amortize the mortgage loan for the first one year 3. Suppose the mortgage is paid off after one year, how much will be paid to clear the mortage
A borrower has been analyzing different adjustable rate mortgage (ARM) alternatives for the purchase of a property. The borrower anticipates owning the property for five years. The lender first offers a $150,000, 30-year fully amortizing ARM with the following terms: Initial interest rate = 6 percentIndex = 1−year TreasuriesPayments reset each yearMargin = 2 percentInterest rate cap = NonePayment cap = NoneNegative amortization = Not allowedDiscount points = 2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2 = 7 percent; (BOY) 3 = 8.5 percent; (BOY) 4 = 9.5 percent; (BOY) 5 = 11 percent. Required: a. Compute the payments and loan balances for the unrestricted ARM for the five-year period. b. Compute the yield for the unrestricted ARM for the five-year period.
Assume that a borrower is expected to prepay a loan at the end of Year 5. Based on the following loan information on the fully-amortized fixed rate mortgage what is the effective cost of borrowing of Loan C? (choose the closest answer) Financial Calculator 1: Financial Calculator 2 Loan Amount Maturity Contract interest rate Upfront fees Upfront mortgage Insurance fee Prepayment after Year Effective Cost of Borrowing 86.79 7AN Loan C $200,000 30 years 6.25% 3% 1.6% 5 Quiz Score: 8 o
Suppose a homeowner has an existing mortgage loan with these terms: Remaining balance of $150,000, interest rate of 8 percent, and remaining term of 10 years (monthly payments). This loan can be replaced by a loan at an interest rate of 6 percent, at a cost of 8 percent of the outstanding loan amount. Required: a. What is the net benefit of refinancing? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. b. What is the NPV if the homeowner expects to be in the home for only five more years? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. a. Net benefit of refinancing b. NPV $ + 6,552.77 1,819.91
The price of a condominium is $187,.000. The bank requires a 5% down payment and one point at the time of closing. The cost of the condominium is financed with a 30-year fixed-rate mortgage at 6.5%. Use the following formula to determine the regular payment amount. Complete parts (a) through (e) below. P. PMT = nt7 a. Find the required down payment. b. Find the amount of the mortgage. $4 c. How much must be paid for the one point at closing? $4 (Round to the nearest dollar as needed.) d. Find the monthly payment (excluding escrowed taxes and insurance). $4 (Round to the nearest dollar as needed.) Enter your answer in each of the answer boxes. 9:56 PM 82°F Partly cloudy ^ 6/30/2021 99+ O Type here to search DELL PgDn Home Delete PrtScr Insert F11 F12 F9 F10 F7 F8 F5 F6 F2 F3 F4 Num Lock Esc F1 Backspace & 林 %24 8. 3. 4. 6. R WE Enter K L F 會
A fully amortizing CAM loan is made for $132,000 at 6 percent interest for 20 years. Required: a. What will be the payments and balances for the first six months? b. What would payments be for a CPM loan? c. If both loans were repaid at the end of year 5, would the lender earn a higher rate of interest on either loan? Complete this question by entering your answers in the tabs below. Required A Required B Required C What will be the payments and balances for the first six months? (Round your intermediate calculations and final answers to the 2 decimal places.) Month 1 Month 2 Month 3 Total Payment End Balance
1. Assuming the cost of mortgage is $400,000, and the owner of the house makes a down payment of $40,000, with 8% interest rate and 10 years repayment plan. a. calculate the total amount of loan, monthly rate, number of payment periods, monthly payment, total interest paid, and amount borrowed. b. With the aid of what PMT function in a one variable condition, calculate monthly payment, total amount payable, total interest payable for: 12 yrs, 16 yrs, 20 yrs ,25 yrs, 30 yrs, 35 yrs mortgage.
A borrower has taken out a 30-year mortgage for $104,000 at an annual rate of 12%. a. Use the table to find the monthly payment for this mortgage. b. Construct the first three lines of an amortization schedule for this mortgage. c. Assume that the borrower has decided to pay an extra $200 per month to pay off the mortga more quickly. Find the first three lines of your payment schedule under this assumption. Click the icon to view a table of monthly payments on a $1,000 loan. a. The monthly payments for this mortgage are $ (Type an integer or a decimal.) Enter your answer in the answer box and then click Check Answer. 6 parts remainino Olear All Cherk Answe javascript:doExercise(3): Copyright © 2020 Pearson Education Inc. All rights reserved. | 99 a 立
The following assumptions are made for each Investigation: The original mortgage is $300,000 amortized over 25 years at 3.99% compounded semi- annually Unless otherwise indicated, assume monthly payments are made. Unless otherwise indicated, assume the interest rate remains constant during the amortization period. Your answers can be entered directly on this assignment, but please hand in all rough work as well. Investigation 1: Shortening the Payment Period Most lending institutions allow mortgage payments to be made monthly, bi-monthly (twice a month) or weekly. Most even allow "accelerated" weekly mortgage payments. With this option, the weekly payment is calculated as a monthly payment divided by 4. 1. (a) Complete this table for the mortgage defined above. The equivalent interest rate of interest for each compounding period has been calculated for you (as discussed in section 6.4 in your text). The Interest saved is the difference between the Total interest paid for monthly…
A property is available for sale that could normally be financed with a fully amortizing $81,200 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $737.87 per month. The builder is offering buyers a mortgage that reduces the payments by 50 percent for the first year and 25 percent for the second year. After the second year, regular monthly payments of $737.87 would be made for the remainder of the loan term. Required: a. How much would you expect the builder to have to give the bank to buy down the payments as indicated? b. Would you recommend the property be purchased if it was selling for $5,000 more than similar properties that do not have the buydown available? Complete this question by entering your answers in the tabs below. Required A Required B How much would you expect the builder to have to give the bank to buy down the payments as indicated? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Down…
2. Using Excel - Calculate using formulas (paste into a word document) the amortization schedule for a 5-year fixed-rate monthly payment mortgage that is fully amortizing. The interest rate on the loan is 6% and it is a $320,000 loan amount at origination with no points or fees.

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