NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An ARM for 100,000 is made at the...

NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS.

An ARM for 100,000 is made at the time when the expected start rate is 5 percent. The Loan will be made with a teaser rate of 2 percent for the first year, after which the rate will be reset. The loan is fully amortizing, has a maturity of 25 years, and payments will be made monthly.

a. What will be the payments during the first year?

b. Assuming that the reset rate is 6 percent at the beginning of year (BOY) 2, what will the payments be?

c. By what percentage will the monthly payments increase?

d. What if the reset date is three years after loan origination and the reset rate is 6 percent, what will the loan payments be beginning in year 4 through year 25?

Solutions

Expert Solution

We can calculate the desired result in excel sheet as follows:

Formulas used in the excel sheet are:

Hope I am able to solve your concern. If you are satisfied hit a thumbs up !!

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An investor has $60,000 to invest in a...

NEEDS TO BE DONE IN EXCEL WITH CALCULATIONS. An investor has $60,000 to invest in a 280,000 property. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and second mortgage for $40,000 at 13 percent for 20 years. All loans require monthly payments and are fully amortizing a. Which alternative should the borrower choose, assuming he will own the property for the full loan term? b....

PLEASE SOLVE IN EXCEL WITH CALCULATIONS AND WORK. A mortgage for $100,000 is made with initial...

PLEASE SOLVE IN EXCEL WITH CALCULATIONS AND WORK. A mortgage for $100,000 is made with initial payments of $500 per month for the first year. The interest rate is 9 percent. After the first year, payments will increase to an amount that makes the loan fully amortizable over the remaining 24 years with constant monthly payments. a. Calculate the interest deductions for the loan for the first year. b. How much, if any, interest must be deferred until the second...

NEEDS TO BE DONE IN EXCEL. A price level adjusted mortage (PLAM) is made with the...

NEEDS TO BE DONE IN EXCEL. A price level adjusted mortage (PLAM) is made with the following terms: Amount=$95,000 Initial interest rate= 4 percent Term= 30 Years Points= 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: a. Compute the payments at the beginning of each year (BOY) b. what is the loan balance at the end of...

The Ratio Calculations should be done in a table in Excel and included with your submission....

The Ratio Calculations should be done in a table in Excel and included with your submission. The following ratios should be included for Pier 1 for 2 years: calculate these ratios below is a link to 10-K form Working Capital Current Ratio Total Debt to Total Equity Ratio Times Interest Earned RNOA ROCE Show calculations for pier 1 https://investors.pier1.com/financial-information/annual-reports

Calculations must be done in Excel - Using the capital budgeting method of; Tax Effects, then...

Calculations must be done in Excel - Using the capital budgeting method of; Tax Effects, then Cash flows, then NPV. As the financial advisor to All Star Manufacturing you are evaluating the following new investment in a manufacturing project: - The project has a useful life of 12 years. Land costs $6m and is estimated to have a resale value of $10m at the completion of the project. Buildings cost $5m, with allowable depreciation of 10% pa reducing balance and...

Calculations must be done in Excel Polycorp is considering an investment in new plant of $3.2...

Calculations must be done in Excel Polycorp is considering an investment in new plant of $3.2 million. The project will be partially financed with a loan of $2,000,000 which will be repaid over the next five years in equal annual end of year instalments at a rate of 6.20 percent pa. The rest of the project will be financed by equity. Assume straight-line depreciation over a five-year life, and no taxes. The project’s cash flows before loan repayments and interest...

Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are...

Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are evaluating the following types of cars to add to the fleet: - Speedster: - A sporty convertible with a cost of $120,000 and a useful life of 4 years. It will produce rental income of $80,000 per year and operating costs of $15,000 per year. A major service is required after 2 years costing $20,000. A salvage value of $30,000 is expected after 4...

This needs to be done in Excel and that is where I am having issues Healthy...

This needs to be done in Excel and that is where I am having issues Healthy Snacks Co. produces snack mixes. Recently, the company has decided to introduce a new snack mix that has peanuts, raisins, pretzels, dries cranberries, sunflower seeds and pistachios. Each bag of the new snack is designed in order to hold 250 grams of the snack. The company has decided to market the new product with a emphasis on its health benefits. After consulting nutritionists, Healthy...

Project 1 Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals...

Project 1 Calculations must be done in Excel As the financial advisor to Upmarket Car Rentals you are evaluating the following types of cars to add to the fleet: - 1. Speedster: - A sporty convertible with a cost of $120,000 and a useful life of 4 years. It will produce rental income of $80,000 per year and operating costs of $15,000 per year. A major service is required after 2 years costing $20,000. A salvage value of $30,000 is...

Project 1 Calculations must be done in Excel Polycorp is considering an investment in new plant...

Project 1 Calculations must be done in Excel Polycorp is considering an investment in new plant of $3 million. The project will be partially financed by a loan of $2 million, which will be repaid over five years in equal annual end of year instalments at a rate of 6.5 percent pa. The rest of the project will be financed by equity. Assume straight-line depreciation over a five-year life, and no taxes. The project’s cash flows before loan repayments and...

Subjects