Question

* Advance Algebra With Financial Applications *

Fiona is purchasing a condominium and is financing $305,000 with a 30-year 5/1 ARM at 4.65% with a 1/12 cap structure. What will her payments be at the beginning of year 6?

$1436.86

$1572.69

$1608.51

$1736.26

Answer 1

I know I need to use this M=B[((i)(1+i)^(n*t))/((1+i)^(n*t)-(1))]

Answer 2

I just wanna know what's going to be "i" ?

Answer 3

for 5 years the i is set; then for each year after it goes up by 1 to a cap of at most 12

Answer 4

my process is to determine the payments for the first 5 years

then balance out the loan after 5 years of those payments

then use the remaining balance to recalulate the payments in year 6 at +1 interst

Answer 5

$305,000 with a 30-year 5/1 ARM at 4.65%

P = 305500(k^12*30)(1-k)/(1-k^(12*30)), k=1+.0465/12

Balance after 5 years is:

B5 = 305500k^(5*12) - P(1-k^(5*12))/(1-k). k=1+.0456/12

Answer 6

use B5, and the remaining time (25 years) and an interest of 5.65 to recalculate the payment

Answer 7

P = 1575.27 for the first 5 years

5 year balance gets us to: 277 634

Po = 277634k^(12*25)(1-k)/(1-k^(12*25)), k=1+.0565/12, or about 1729.88

Answer 8

due to some rnding errors ... id say thats close enough :)

Answer 9

1736 without the rnds

Answer 10

Thank you soo much !

Answer 11

yep