Problem 1 (40 marks)
MakeNu Mortgage Company is offering a new mortgage instrument called the Stable Mortgage. This mortgage is composed
of both a fixed rate and an adjustable rate component. Mrs. Maria Perez is interested in financing a property, which costs
$100,000, and is to be financed by Stable Home Mortgages (SHM) on the following terms:
The SHM requires a 5% down payment, costs the borrower 2 discount points, and allows 75% of the mortgage to be fixed
and 25% to be adjustable. The fixed portion of the loan is for 30 years at an annual interest rate of 10.5%. With neither
interest rate cap nor payment cap, the adjustable portion is also for 30 years with the following terms:
Initial interest rate = 9%
Index = one-year Treasuries
Payments reset each year
Margin = 2%
Interest rate cap = None
Payment cap = None
The projected one-year U. S. Treasury-bill index, to which the ARM is tied, is as follows:
(BOY) 2 = 10%
(BOY) 3 = 11%
(BOY) 4 = 8%
(BOY) 5 = 12%
(a) Calculate Mrs. Perez’s total monthly payment s and end of the year loan balances for the first five years.
(b) Calculate the lender’s yield, assuming Mrs. Perez repays the loan after five-years.

Georgia orchards produced a good crop of peaches this year. after preparing the following income statement, the company is concerned about the net loss on its no. 3 peaches. georgia orchards income statement for year ended december 31, 2017 no. 1 no. 2 no. 3 combined sales (by grade) no. 1: 300,000 ibs. @ $1.50/lb $ 450,000 no. 2: 300,000 ibs. @ $1.00/lb $ 300,000 no. 3: 750,000 ibs. @ $0.25/lb $ 187,500 total sales $ 937,500 costs tree pruning and care @ $0.30/ib 90,000 90,000 225,000 405,000 picking, sorting, and grading @ $0.15/ib 45,000 45,000 112,500 202,500 delivery costs 15,000 15,000 37,500 67,500 total costs 150,000 150,000 375,000 675,000 net income (loss) $ 300,000 $ 150,000 $ (187,500 ) $ 262,500 in preparing this statement, the company allocated joint costs among the grades on a physical basis as an equal amount per pound. the company’s delivery cost records show that $30,000 of the $67,500 relates to crating the no. 1 and no. 2 peaches and hauling them to the buyer. the remaining $37,500 of delivery costs is for crating the no. 3 peaches and hauling them to the cannery. required: 1. prepare reports showing cost allocations on a sales value basis to the three grades of peaches. separate the delivery costs into the amounts directly identifiable with each grade. then allocate any shared delivery costs on the basis of the relative sales value of each grade. (do not round intermediate calculations.)