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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%.


Definitions:

Estimated Value

An approximation of a quantity based on available information or statistical methods.

Observations

Individual data points or items recorded during an experiment or survey.

Least Squares Regression Line

A statistical method used to find a straight line that best fits a set of data points by minimizing the sum of the squares of the vertical distances of the points from the line.

Income

The amount of money received by a person or organization, often from employment, investments, or business ventures.

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