A PLAM Has the Following Terms: Loan Amount: $118,000,real Interest

question 32

Multiple Choice

A PLAM has the following terms: loan amount: $118,000,real interest rate: 5.50%, 30-year term,2.50 discount points,annual payment adjustments,monthly payments.The payment in year two is $649.89 and the observed inflation at EOY1 is 2% and EOY2 is 4%.If the loan is repaid at the EOY2,what is the balance?

• A) $111,289
• B) $115,741
• C) $113,515
• D) $119,038
• E) cannot be determined

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