Question
In: Finance
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $4,500,000.
Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5 points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero fees upfront.
Assuming Ann makes payments for 2 years before she sells the house and pays the bank the
the
bank the balance, which mortgage has the lowest cost of borrowing
(lowest annualized IRR)
Solutions
Expert Solution
Annualized cost of borrowing of Mortgage A= 5.18371%
Annualized cost of borrowing of Mortgage B= 6.00%
Details of calculation as below:
As above, Mortgage A has lowest cost of borrowing (lowest annualized IRR).
jeff jeffy answered 2 years agoRelated Solutions
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $4,500,000.
Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5
points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero
fees upfront.
Assuming Ann makes payments for 2 years before she sells the
house and pays the bank the balance, which mortgage has the lowest
cost of borrowing (ie lowest annualized IRR)? Type 1 for...
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $1,250,000.
Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5
points upfront.
Assuming Ann makes payments for 2 years before she sells the
house and pays the bank the balance, what is Ann’s annualized IRR
from mortgage A?
#2 IRR from mortgage B?
I would like to know how to calculate the IRR of this in a BA
II
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $1,250,000. Mortgage A has a
4.38% interest rate and requires Ann to pay 1.5 points upfront.
Assuming Ann makes payments for 30 years, what is Ann’s IRR from
mortgage A? Note: IRR is always annualized. If you’ve found a
monthly rate, multiply by 12. In this case, two digits for a
monthly rate is not enough to avoid rounding errors in the annual
rate...
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000. Mortgage A has a
4.38% interest rate and requires Ann to pay 1.5 points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero fees
upfront.
(A) Assuming Ann makes payments for 30 years, what is Ann’s
annualized IRR from mortgage A?
(B) Assuming Ann makes payments for 30 years, what is Ann’s
annualized IRR from mortgage B?
(C)...
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000. Mortgage A has a
4.38% interest rate and requires Ann to pay 1.5 points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero fees
upfront. Assuming Ann makes payments for 2 years before she sells
the house and pays the bank the balance, what is Ann’s annualized
IRR from mortgage B?
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000.
Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5
points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero
fees upfront.
Assuming Ann makes payments for 30 years, what is Ann’s
annualized IRR from mortgage B?
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000. Mortgage A has a
4.38% interest rate and requires Ann to pay 1.5 points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero fees
upfront. Assuming Ann makes payments for 2 years before she sells
the house and pays the bank the balance, what is Ann’s annualized
IRR from mortgage A?
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for...
Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000. Mortgage A has a
4.38% interest rate and requires Ann to pay 1.5 points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero fees
upfront. Assuming Ann makes payments for 2 years before she sells
the house and pays the bank the balance, what is Ann’s annualized
IRR from mortgage A
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000.
Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000. Mortgage A has a 5.25% interest rate and requires Ann to pay 1.5 points upfront. Mortgage B has a 6% interest rate and requires Ann to pay zero fees upfront. Assuming Ann makes payments for 30 years, what is Ann’s annualized IRR from mortgage A?
12. Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with monthly payments...
12. Ann is looking for a fully amortizing 30 year Fixed Rate
Mortgage with monthly payments for $3,200,000.
Mortgage A has a 4.38% interest rate and requires Ann to pay 1.5
points upfront.
Mortgage B has a 6% interest rate and requires Ann to pay zero
fees upfront.
Assuming Ann makes payments for 30 years, which mortgage has the
lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A,
type 2 for B.
13. Ann is looking for...
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