1. What are the monthly payments for a 30-year traditional mortgage? What are the payments for a 20-year traditional mortgage?
2. Prepare an amortization table for the first six months of the traditional 30-year mortgage. How much of the first payment goes toward principal?
3. How long would it take for S&S Air to pay off the smart loan assuming 30-year traditional mortgage payments? Why is this shorter than the time needed to pay off the traditional mortgage? How much interest would the company save?
4. Assume S&S Air takes out a bullet loan under the terms described. What are the payments on the loan?
5. What are the payments for the interest-only loan?
6. Which mortgage is the best for the company? Are there any potential risks in this action?