Questions: Show the timeline from your perspective. (Select the best choice below.) A. Month B. Month C. Month D. Month 0 Cash Flow 1 2 2,000 2,000 2,000 3 4 4 (1.) 342 2,000 Which of the following loan timelines is from the bank's perspective? (Select the best choice below.) A. Month 0 2 1 4 3 1 2,000 Cash Flow 2,000 2,000 2,000 2,000 B. Month 0 1 2 4 xrightarrow360 2,000 Cash Flow -2,000 -2,000 -2,000 -2,000 -2,000 xrightarrow[- 2000]360 C. Month 0 1 2 3 4 -2,000 312

Solution Steps

You have a mortgage with 26 years remaining, and you make monthly payments of $2,000. The task is to identify the correct cash flow timeline from your perspective and the bank's perspective.

From your perspective, you are making payments of $2,000 each month. This means cash is flowing out from you to the bank.

The correct timeline from your perspective should show a negative cash flow of $2,000 each month. This matches option D:

• Month 0: -$2,000
• Month 1: -$2,000
• Month 2: -$2,000
• Month 3: -$2,000
• Month 4: -$2,000
• ...
• Month 360: -$2,000

From the bank's perspective, they are receiving $2,000 each month from you. This means cash is flowing into the bank.

The correct timeline from the bank's perspective should show a positive cash flow of $2,000 each month. This matches option A:

• Month 0: $2,000
• Month 1: $2,000
• Month 2: $2,000
• Month 3: $2,000
• Month 4: $2,000
• ...
• Month 360: $2,000

Final Answer