Contemporary Mathematics for Business and Consumers 7th Edition by Robert Brechner ,George Bergeman

Exercise 29

As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI, using Table 14-1 and the monthly PITI for the following mortgages.
Larry and Cindy Lynden purchased a townhome in Alison Estates with an adjustable-rate mortgage. The lender's margin on the loan is 4.1%, and the overall rate cap is 5% over the life of the loan. The current index rate is the prime rate, 3.25%.
a. What is the calculated interest rate of the ARM?
Calculated ARM interest rate = Index rate + Lender's margin
Calculated ARM interest rate = 3.25 + 4.1 =

b. What is the maximum overall rate of the loan?
Maximum overall ARM rate = Initial rate + Overall rate cap
Maximum overall ARM rate = 7.35 + 5.0 =