Question

consider the same cmo as in the previous question and suppose that in month 10, the beginning balance on tranche a is $1,682,409.07, the beginning balance on tranche b is $2,000,000.00 and the beginning balance on z is $2,051,581.84. how much cash flow do investors in tranche a receive in month 10?

Answer 1

The cash flow for investors in tranche a in month 10 is $84,120.45.

To calculate the cash flow that investors in tranche a receive in month 10, we need to first find the interest rate for tranche a.

Once we have the interest rate, we can use it to calculate the interest for month 10 on the beginning balance of $1,682,409.07.

The cash flow for tranche a in month 10 will be the sum of the interest earned and the principal balance.

Let's assume the interest rate for tranche a is 5%.

The interest earned in month 10 can be calculated as: $1,682,409.07 * 5% = $84,120.45.

The principal balance remains unchanged, so the cash flow for investors in tranche a in month 10 is $84,120.45.