Your brother-in-law asks you to lend him $100,000 as a second mortgage on his vacation home. He promises to make level monthly payments for 10 years, 120 payments in all. You decide that a fair interest rate is 8% compounded annually. What should the monthly payment be on the $100,000 loan?
- $1060
- $1079
- $1099
- $2010
- $2020
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.
You are considering buying a two bedroom apartment in Back Bay for $600,000. You plan to make a $100,000 down payment and take out a $500,000 30-year mortgage for the rest. The interest rate on the mortgage is 8.5% monthly APR.
How much do you owe the bank immediately after the 60th monthly payment?
- $187,389
- $225,125
- $395,250
- $477,451
- $542,766
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.