A Lender Wants to Achieve a 8

question 25

Essay

A lender wants to achieve a 8.5% yield MEY) on a 30-year amortization, monthly-payment loan with an 8-year maturity with balloon. How many disbursement discount points must the lender charge under the following circumstances:
a) Contract interest rate is 8%; b) Contract interest rate is 7.5%.

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Definitions:

Finished Product

A good that has completed the manufacturing process and is ready for sale to customers.

Production Process

Refers to the method or sequence of operations involved in the production of a good or service.

Prime Costs

The combined costs of direct materials and direct labor, which are directly attributable to the production of goods.

Prime Costs

A business's direct costs of materials and labor that are associated with the production of goods or services.