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SCENARIO 2 Discounting a Partially Amortized Loan Assume that the Kwon mortgage was based on a 5-year term, with the investor’s yield expectation remaining the same. The cost of sale would be reduced significantly given a balloon payment at end-of-year five (EOY 5). STEP 1 Calculate Monthly Mortgage Payment C ALL 6 NOM% 2 P/YR EFF% 12 P/YR NOM% 300 N 180000 PV PMT The monthly payment is $1,151.65. STEP 2 Calculate Balance Outstanding (Balloon Payment) at EOY 5 60 INPUT AMORT The outstanding balance at the end of year five is $161,706.07. Store this amount as the future value of the mortgage by

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