1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ann [662]
3 years ago
5

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan

have a "teaser" rate of 4%, after that, the rate can reset with a 5% annual payment cap. On the reset date, the composite rate is 6%. What would the Year 3 monthly payment be?
a. $955
b. $1,067
c. $1,003
d. $1,186
e. Because of the payment cap, the payment would not change.
Business
1 answer:
lara31 [8.8K]3 years ago
6 0

Answer:

1003

Explanation:

Given:

Period= 30 years, Loan amount= $200,000,

Payments- Monthly,

Teaser rate for first 2 years = 4%,

Annual payment cap=5%, Composite rate on reset date= 6%

Annual rate for 2 years =4%

Monthly rate will be 4/12 = 0.3333% = 0.003333

n=30years=360 months

Monthly payment for first 2 years = Pr(1+r)^n/((1+r)^n-1)

= 200000\times0.0033\times1.033^{360}/(1.033^{360}-1)

= 954.83

or by Excel function = PMT(0.003333,360,200000,0) = 954.83

Loan balance after 2 years = PV(0.003333,336,-954.83,0) = 192,812.36 or

Balance=A(1+r)^n-PMT\times(1+r)^n-1)/i

=200000(1.0033)^{24}-954.83(1+0.003333)^{24}-1)/0.003333

= 192,812.36

Composite rate is 6% but payment is capped at 5%. So new payment from year 3 is 954.83×1.05=1002.57=1003

You might be interested in
Why does the credit card company set the minimum payment so low
Illusion [34]

Answer:

To increase profit from interests by increasing duration of balance repayment.

Explanation:

The purpose of every business is to make profits and the reason why every credit card company includes a minimum payment is not just to make it easier to pay but by only making minimum payments, credit card holders could be kept as customers and paying interests on debt for longer.

Secondly, the more the periods the more likely you'll default on some of them and pay penalty fees which means additional income for the companies

5 0
3 years ago
What is the purpose of a marketing plan?
Elza [17]

Answer:

The is purpose of marketing plan is to:define strategies to engage audiences in order to achieve business objectives

Explanation:

hope it helps

4 0
3 years ago
Aaron is proud of the traits associated with his countrymen. They are generally perceived as adventurous with a pronounced incli
bonufazy [111]

Answer:e) uncertainty avoidance

Explanation:

Uncertainty Avoidance refers to how people of different cultures respond to changes or the unknown based on their level of tolerance.

People of different cultures respond or reacts differently when unplanned situations occurs.

Uncertainty Avoidance relates to the level to which individuals of a particular community are comfortable with uncertainty and the unknown.

People who belong to cultures with high uncertainty avoidance try to reduce the occurrence of unknown circumstances and to proceed with careful changes step by step by planning and by implementing rules and regulations. They have very low tolerance for change WHILE people who belong to low uncertainty avoidance culture accept and feel comfortable in unplanned situations and try to have as few rules as possible. They have high tolerance for change.

6 0
3 years ago
The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear belo
slamgirl [31]

Answer:

Net loss of $24,600

Explanation:

Sales              $773,900

Variable Expenses ($402,100)

Contribution Margin $371,800

Avoidable Expenses of B90D

Fixed Manufacturing Expenses        $186,000

Fixed Selling and Admin Expenses  %161,200

Total Avoidable expenses                 $347,200

If the product B90D is discontinued,the contribution margin of $371,800 will be lost by Wengel corporation and costs of $347,200 will be saved.

Therefore there will be net loss of $(371,800-347,200) $24,600 to the company if the product is discontinued.

3 0
3 years ago
What are the portfolio weights for a portfolio that has 145 shares of Stock A that sell for $47 per share and 200 shares of Stoc
ycow [4]

Based on the information given the portfolio weights for a portfolio are:

Stock A 0.6187; Stock B 0.3815.

First step

Shares          Price per share Total value

Stock A 145           $47                       6,815

Stock B 200          $21                       4,200

Total                                                     11,015

Second step

Portfolio weights

Stock A [ 6,815 / 11,015 ] 0.6187

Stock B [ 4,200 / 11,015 ] 0.3813

Inconclusion the portfolio weights for a portfolio are: Stock A 0.6187; Stock B 0.3815.

Learn more here:brainly.com/question/19579061

8 0
2 years ago
Other questions:
  • Cleared checks:
    10·1 answer
  • Outsourcing and telecommuting are examples of which are work place trend?
    7·1 answer
  • What is ivan's marginal benefit if he decides to stay open for six hours instead of five hours?
    8·1 answer
  • Symbic Foods, a chain of fast food restaurants, has included a drop-down menu on its main Web site. With this drop-down menu, pe
    14·1 answer
  • During the month of February, Smiling Moon Inc. had cash receipts of $10,000 and cash disbursements of $7,700. The February 28 c
    7·1 answer
  • 27) Cooley Landscaping Company needs to borrow $30,000 for a new front-end dirt loader. The bank is willing to loan the funds at
    11·1 answer
  • What can you do to figure out how much you can afford when buying a car?
    10·1 answer
  • Brokerage firms make their profits primarily in which of the following ways? A) Consumer deposits. B) Government deposits. C) Di
    9·2 answers
  • What is a transferable skill ?
    10·1 answer
  • Estimates of current rates of extinction:_____________
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!