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JUST DO QUESTION 2 and 3, not 1. The answer to one is 4% I believe....

JUST DO QUESTION 2 and 3, not 1. The answer to one is 4% I believe.

  1. Ann gets a fully amortizing 30-year fixed rate mortgage with quarterly payments for $1,000,000. The interest rate is 4%, compounded quarterly. She prepays the mortgage in 1 quarter (i.e. she makes the 1st payment and immediately prepays the remaining balance). What is Ann’s APR?

    Notes: a quarter equals 3 months, one year consists of 4 quarters, APR is annual.

  2. Modify question 1: At the moment when Ann signs the mortgage, she must pay an origination fee that equals 2 points. Everything else stays the same, and she still prepays the mortgage in 1 quarter. What is Ann’s APR?

  3. Modify question 2: There is still an origination fee of 2 points, but now Ann decides to keep the mortgage for the whole term, i.e. she no longer plans to prepay it. What is Ann’s APR?

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