Answer:
1003
Explanation:
Given:
Period= 30 years, Loan amount= $200,000,
Payments- Monthly,
Teaser rate for first 2 years = 4%,
Annual payment cap=5%, Composite rate on reset date= 6%
Annual rate for 2 years =4%
Monthly rate will be 4/12 = 0.3333% = 0.003333
n=30years=360 months
Monthly payment for first 2 years = [tex]Pr(1+r)^n/((1+r)^n-1)[/tex]
= [tex]200000\times0.0033\times1.033^{360}/(1.033^{360}-1)[/tex]
= 954.83
or by Excel function = PMT(0.003333,360,200000,0) = 954.83
Loan balance after 2 years = PV(0.003333,336,-954.83,0) = 192,812.36 or
Balance=[tex]A(1+r)^n-PMT\times(1+r)^n-1)/i[/tex]
=[tex]200000(1.0033)^{24}-954.83(1+0.003333)^{24}-1)/0.003333[/tex]
= 192,812.36
Composite rate is 6% but payment is capped at 5%. So new payment from year 3 is 954.83×1.05=1002.57=1003
