Question

A property is purchased for $85,000. The purchase is financed with a GPM carrying a 12 percent interest rate. A 75 percent rate of

graduation will be applied to monthly payments beginning each year after the loan is originated for a period of five years. The initial
loan amount is $76,500 for a term of 30 years. The homeowner expects to sell the property eher seven years
Required:
a. If the initial monthly payment is 5005,40, what will the payments be at the beginning of years 2, 3, 4, and 57
b. What would the payment be if a CPM loan was avaliable?
c. Assume the loan is originated with two discount points. What is the effective yield on the GPM

Answer 1

The monthly payments for a $300,000 loan with a 6% interest rate over 30 years would be approximately $1798.65.

To calculate the monthly payments for a $300,000 loan with a 6% interest rate over 30 years, we can use the formula:

PV = R * (1 - (1 + i)^(-n))/i

Where PV is the loan amount, R is the monthly payment, i is the interest rate per period, and n is the number of periods.

Inserting the given values into the formula:

PV = 300,000

i = 6% / 12 = 0.5%

n = 30 * 12 = 360

And solving for R:

R = PV * i / (1 - (1 + i)^(-n))

R = 300,000 * 0.5% / (1 - (1 + 0.5%)^(-360))

R ≈ $1798.65

The monthly payments for a $300,000 loan with a 6% interest rate over 30 years would be approximately $1798.65.