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 = 
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 = 
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 agoRelated Solutions
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