Question
In: Finance
You need a 25-year, fixed-rate mortgage to buy a new home for $210,000. Your mortgage bank...
You need a 25-year, fixed-rate mortgage to buy a new home for $210,000. Your mortgage bank will lend you the money at a 7.6 percent APR for this 300-month loan. However, you can afford monthly payments of only $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.
How large will this balloon payment have to be for you to keep your monthly payments at $850?
Multiple Choice
$618,766.95
$95,983.79
$663,420.23
$637,904.07
$76,490.22
Solutions
Expert Solution
Present value of monthly payment:
Present value is $114,016.2131.
------------------------------------------------------------------------------------------------------------
Difference = $210,000 - $114,016.2131
Difference = $95,983.7869
---------------------------------------------
Balloon payment:
Balloon payment is $637,904.07.
jeff jeffy answered 7 months agoRelated Solutions
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