标题: REAL ESTATE - mortgage balance on ERAT [打印本页] 作者: mamuka12 时间: 2011-7-11 19:42 标题: REAL ESTATE - mortgage balance on ERAT
encountered a problem on SCH practice exams Vol 1:
Page 150, Q34.
this is really confusing...
when computing ERAT, the mortgage balance is the ORIGINAL BORROWING AMOUNT?
it is financed with a 7% annual rate loan with 80% of initial outlay - 80%*40000000=32000000
in the answer it states:
ERAT=selling price - selling cost - mortgage balance - tax on sale
other components can I understand, except it says mortgage balance is 32000000??
isn't it to be the mortgage balance on the 5th year when the asset is sold out?
cannot really get it..作者: RMontgomery 时间: 2011-7-11 19:42
I don't have access to the question, but is it an interest only mortgage? If so, then there is no amortization.
NO EXCUSES作者: tobeornottobe 时间: 2011-7-11 19:42
If I remember correctly the loan was INTEREST-ONLY which explains why the mortgage balance would be the same as the initial amount. This also implies tha the debt-service cost is the same as the interest cost.作者: ningning1984 时间: 2011-7-11 19:42
as far as i remember...morgage balance dat goes in calculating erat is outsanding mortgage balance...which shud ideally be the principal outstanding...right ?? correct me if i am wrong ?作者: madaochenggong 时间: 2011-7-11 19:42
