A price level adjusted mortgage plam is made with the, Ask an Expert

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A price level adjusted mortgage (PLAM) is made with the following terms: Amount $95,000 Initial interest rate 4 percent Term 30 years Points 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years:

a. Compute the payments at the beginning of each year (BOY).

b. What is the loan balance at the end of the fifth year?

c. What is the yield to the lender on such a mortgage?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92081883

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