Question

support answer.  All cash flows are end-of-period unless otherwise stated .

9. You are working on your income taxes and want to figure your mortgage interest deduction for the previous year. Unfortunately someone inadvertently ran your mortgage documents through a shredder. You were able to discover fragments of the amortization schedule that showed elements from a row from that schedule:

Payment# =100

Amount = $1,932.90

Interest = ???

Principal = $709.30

Balance = $244,010.90

a. Determine the APR of this mortgage (two three decimal places);

b. Determine the original amount of the mortgage;

c. Determine the original term (length) of the mortgage; d. Complete the following row of the mortgage’s amortization schedule:

Payment # = 200

Amount = ??

Interest = ??

Principal = ??

Balance = ??

10. You are considering lending some money to a company that offers to make semiannual payments of $4,000 to you for thirty years and then pay you $100,000 at the end of the thirtieth year. How much would you lend to this company if

a. you required an APR of ten percent compounded semiannually?

b. you required an APR of six percent compounded semiannually?

c. you required an APR of eight percent compounded semiannually?

Answer 1