Question

use the same cmo as in the previous question and suppose that in month 10, the beginning balance on tranche a is $2,733,990.91 and the beginning balance on tranche b is $3,000,000. how much cash flow do investors in tranche a receive in month 10?

Answer 1

The cash flow investors in tranche A receive in month 10 is $266,009.09.

To calculate the cash flow investors in tranche A receive in month 10, we need to determine the principal payment for tranche A.

This can be done by subtracting the beginning balance of tranche A in month 10 from the beginning balance of tranche A in month 9.

Assuming there were no interest payments in month 10, the cash flow investors in tranche A receive is the principal payment for tranche A in month 10.

Principal payment for tranche A in month 10 = Beginning balance of tranche A in month 9 - Beginning balance of tranche A in month 10

Principal payment for tranche A in month 10 = $3,000,000 - $2,733,990.91

Principal payment for tranche A in month 10 = $266,009.09