Real Estate Finance & Investments 15th Edition by William Brueggeman, Jeffrey Fisher

تمرين 1

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