Question

11. Develop the payment table for a balloon payment loan $125,000 loan, 10 years, 10% interest rate, balloon payment of $100,000

Year	Total Payment	Interest Paid	Principal Paid	Principal Remaining
Balloon

Answer 1

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Answer:

FV = ballon payment = $100,000

r = interest rate = 10%

n = 10 years

PV = Original Loan Amount = $125,000

FV = PV *(1+r)^n - P[(1+r)^n - 1] /r

$100,000 = [$125,000 *(1+10%)^10] - P[(1+10%)^10 -1] /10%

$100,000 = $324,217.808 - [P * 15.9374246]

[P * 15.9374246] = 224,217.808

P = $14,068.6349

Annual Payment of Loan is $14,068.63