What is the first monthly payment (payment at t=1) for each of the following loa

Question

What is the first monthly payment (payment at t=1) for each of the following loans? Each loan is for a property bought for $500,000 with an 80% LTV ratio. LIBOR is currently at 2.5%

A.FRM 30 year, fully amortizing, interest rate=5%

B.ARM 5/1, initial interest rate (“teaser”) is 3.5%, after reset date rate is LIBOR+50bp

C.FRM 30 year, interest rate=5% partially amortizing with balloon payment of $200,000

D.ARM, annual reset, IO, interest rate is LIBOR+80bp

E.FRM 30 year, initial interest rate is 5.5%, negative amortization with balloon payment of $500,000

Explanation / Answer

A)FRM 30 year loan amount =400,000

monthly payment using financial calculator is 2147.29

B) Ist payment is 1796

C) $ 1909

D)$ 1333

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