Question

In: Finance

You would like to buy a house that costs $ 350,000 . You have $ 50,000...

You would like to buy a house that costs

$ 350,000

You have

$ 50,000

in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of

7 %

per year. You can afford to pay only

$ 23,500

per year. The bank agrees to allow you to pay this amount each year, yet still borrow

$ 300,000

At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will this balloon payment be?

The PV of the annuity is : (Round to the nearest dollar.)

The balloon payment is (Round to the nearest dollar.)

Solutions

Expert Solution

Solution:-

To Calculate Annual Payment-

Annual Payment =

Annual Payment = $24,175.92

To Calculate the Ballon Payment-

Let Ballon Payment = X

Present Value of Loan must be equal to amount borrowed.

Amount Borrowed =

3,00,000 =

3,00,000 - 2,91,612.47 =

8,387.53 =

X = 8,387.53 *

X = 8,387.53 * 7.612255

X = $63,848.02

Ballon Payment = $63,848.02

If you have any query related to question then feel free to ask me in a comment.Thanks.

jeff jeffy answered 1 year ago

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