You choose a 3/1 hybrid loan of $150,000 with 30 year amortization and an initial rate...

You choose a 3/1 hybrid loan of $150,000 with 30 year amortization and an initial rate of 4.25%. What is the balance of the loan after three years?

A. $143,985
B. $142,080
C. $143,400
D. $141,736

Solutions

Expert Solution

Rate =4.25%
Number of Years =30
PV of Loan =150000
Annual Payment =PV/((1-(1+r)^-n)/r) =150000/((1-(1+4.25%)^-30)/4.25%) =8939.73697

Balance of loan after 3 years =PV*(1+r)^n-PMT*((1+r)^n-1)/r) =150000*(1+4.25%)^3-8939.73697*((1+4.25%)^3-1)/4.25%) =141736 (Option d is correct option)

jeff jeffy answered 2 years ago

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