Question

Be sure to show step by step explanation by using inputs ( NV, I,pmt,Fv,I/y) financial calculator

In a fixed-term, level-payment reverse mortgage, sometimes called a reverse annuity mortgage, or

RAM, a lender agrees to pay the homeowner a monthly payment, or annuity, and expects to be repaid from the homeowner's equity when he or she sells the home or obtains other financing to pay off the RAM. Consider a household that owns a $150,000 home free and clear of mortgage debt. The RAM lender agrees to a $100,000 RAM for 10 years at 6 percent. Assume payments are made annually, at the beginning of each year to the homeowner. Calculate the annual payment on the RAM.

Answer 1

Amount borrowed	-1,00,000
Tenure (in years)	10
Rate	6.00%
Annual Payment to be made if at the beginning of the year	12,817.73
Formula used	=PMT(rate,nper,pv,[fv],[type])	=PMT(6.00%,10,-100000,0,1)