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What is the amortization schedule for a mortgage of $1,600,000 in with 1). an initial ten...

What is the amortization schedule for a mortgage of $1,600,000 in with 1). an initial ten year fixed rate of 6.5%; twenty year amortization (monthly); ballooning at the end of the tenth year; and 2) Second ten year rate "capped" at 7.5%; monthly amortization over the remaining ten years on the balance rolled-over from #1.

Solutions

Expert Solution

1)
Pv Amount of mortgage $1,600,000
Nper Number of months of amortization 240 (20*12)
Rate Monthly interest rate=(6.5/12)% 0.005416667
PMT Monthly payment $11,929.17 (Using PMT function of excelwith Rate=0.00541667,Nper=240, Pv=-1600000)
Number of months of payment 120 (10*12)
A Present Value of monthly payments $1,050,584 (Using PV function of excelwith Rate=0.00541667,Nper=120, Pmt=-11929.17)
P=Pv-A Present value of Loan balance $549,416
FV Baloon payment at the end of 10 year $1,050,584.12 (Using FV function of excelwith Rate=0.00541667,Nper=120, Pv=-549416)
2) SECOND TEN YEAR AT 7.5% Monthly Amortization
Pv Loan amount at beging of the term $1,050,584
Rate Monthly interest rate=(7.5/12)% 0.00625
Nper Number of months of amortization 120 (10*12)
PMT Monthly payment $12,470.62 (Using PMT function of excelwith Rate=0.00625,Nper=120, Pv=-1050584)
AMORTIZATION SCHEDULE 1
A B C=A*0.005416667 D=B-C E=A-D
Month Beginning balance Total Payment Interest Principal Ending balance
1 $1,600,000 $11,929.17 $8,666.67 $3,262.50 $1,596,737
2 $1,596,737 $11,929.17 $8,649.00 $3,280.17 $1,593,457
3 $1,593,457 $11,929.17 $8,631.23 $3,297.94 $1,590,159
4 $1,590,159 $11,929.17 $8,613.36 $3,315.81 $1,586,844
5 $1,586,844 $11,929.17 $8,595.40 $3,333.77 $1,583,510
6 $1,583,510 $11,929.17 $8,577.35 $3,351.82 $1,580,158

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