Exercise 1 A mortgage loan in the amount of $100,000 is made at 12% interest for 20 years. Payments are to be monthly in each part of this problem. a. What is the monthly payment if: 1. The loan is fully amortizing? 2. The loan is partially amortizing and a balloon payment of $50,000 is scheduled at the end of year 20 ? 3. It is a nonamortizing, or "interest-only" loan? 4. It is a negative amortizing loan and the loan balance will be $150,000 at the end of year 20 ? b. What will the loan balance be at the end of year 5 under parts a (1) through a (4)? c. What would be the interest portion of the payment scheduled for payment at the end of month 61 for each case (1) through (4) above? (Hint: Excel function IPMT) d. Assume that the lender charges 3% origination fee to close the loans in parts a(1) through a(4). What would be the effective rate of interest for each (this rate has to be disclosed to the borrower and is APR in this case) - assume the loan is held until maturity? e. Assuming that 3% origination fee is paid at the closing (when the funds are borrowed) and the loan is prepaid at the end of year 5 , what will be the effective rate of interest for each loan in parts a
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(1)
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through a(4) ? f. Now assume that 3% origination fee are paid at the closing and the loan is prepaid at the end of year 5 , but the lender also charges a prepayment penalty of 2%. What will be the effective rate of interest for each loan in parts a
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(1) through a(4) ? ​