Purchase Solution

Construct an amortization schedule showing interest and principal payments for each month of the thirty year term.

Not what you're looking for?

Ask Custom Question

You have contracted to purchase a $10,000,000 multi-family property with $2,000,000 cash down payment as equity and an $8,000,000 mortgage loan. Assume mortgage rates for this type of investment property are 8.50% fixed rate, fully amortized over 30 years, with monthly payments of interest and principal.

(1) Construct an amortization schedule showing interest and principal payments for each month of the thirty year term. Also show the outstanding loan balance (unpaid principal balance) at the end of each month. Graph the balance outstanding over time. If your holding period is only five years, how much will you still owe after 60 months? You may assume no unscheduled payments of principal occur prior to that time.

(2) Suppose another lender offers 8.00% interest, fixed rate, also amortized over 30 years with monthly payments of interest and principal, but with loan maturity in 10 years, i.e. after 120 payments. Develop a similar amortization schedule for this alternative loan structure then answer the following questions.

What would be the difference in monthly payments between the two options?

What would be the amount of the balloon payment in 10 years?

Under which loan option would you pay the more total dollars of interest? More total dollars of principal?

Purchase this Solution
Solution Summary

You will find the answer to this puzzling assignment inside...

Solution Preview

(1) Construct an amortization schedule showing interest and principal payments for each month of the thirty year term. Also show the outstanding loan balance (unpaid principal balance) at the end of each month. Graph the balance outstanding over time. If your holding period is only five years, how much will you still owe after 60 ...

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Introduction to Finance

This quiz test introductory finance topics.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Finance Gittman

    Calculate the annual, end-of-year loan payment. b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c.

  • Loan amortization schedule

    Calculate the annual, end-of-year loan payment. b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c.

  • Amortization schedule for a loan using Excel spreadsheet

    EAR =(1+interest rate/number of payments per year)^(number of payments per year) -1 EAR 8.30% This post shows in simple steps how to develop the amortization schedule for a loan.

  • Preparing loan amortization schedule

    Prepare a loan amortization schedule showing the interest and principal break down of each of the three loan payments. c.

  • Joan Messineo

    Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c. Explain why the interest portion of each payment declines with the passage of time.

  • Amortization table

    Monthly Payment of the mortgage. ? Mortgage Balance Remaining at the end of each month (Total 180 months). ? Principal Repayment for each month. ? Interest Expenses for each month, each year, and the life of the loan.

  • Constructing a Loan Amortization schedule

    Beginning principal: 150,000 Interest accrued: 150,000 X .075 Principal + Interest: Add the first two amounts Take out the payment of $37,074.71 to get the starting principal for the next year (To the principal you apply the payment minus the

  • Amortization Schedule for Two Loans

    In what year(s) is the interest payment is the same under both the amortization schedule with equal payments and the amortization schedule with equal principal payments? 4.

  • Mortgage Amortization Schedule

    All calculations and formulas used for the Amortization Schedule are in the Excel file. The Word file contains the solutions to each question.

View More Related Solutions