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Example 2: A customer has an existing mortgage with a balance of
$125.010, a remaining term of 200 months, and a $1051.61 monthly
payment. He wishes to obtain a $200,000, 9 1/2% wrap-around with 240
monthly payments of $1681.71 and a balloon payment at the end of the
240th month of $129,963.35. If you, as a lender, accept the proposal, what
is your rate of return?
Keystrokes Display
CLEAR
200000
125010
-74,990.00 Net investment.
1051.61
1681.71
630.10 Net cash flow received by lender.
99
2
The above cash flow occurs 200
times.
1,681.71 Next cash flow received by lender.
39
39.00
Cash flow occurs 39 times.
129963.35
131,645.06
Final cash flow.
12
11.84
Rate of return to lender.
$125010
$1681.71 $1681.71 $1681.71
$-1051.61 $-1051.61
200mos.
$-200000
$129963.35
240 mos.