Problem 5-1 A price level adjusted mortgage (PLAM) is made with the following terms: Amount =$96,400 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: Required: a. Compute the paym

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Problem 5-1 A price level adjusted mortgage (PLAM) is made with the following terms: Amount

=$96,400

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: Required: 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? Complete this question by entering your answers in the tabs below. Required A Required B Required C

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