Ask Question
7 October, 07:15

You have just arranged for a $1,560,000 mortgage to finance the purchase of a large tract of land. the mortgage has an apr of 5.6 percent, and it calls for monthly payments over the next 30 years. however, the loan has an eight-year balloon payment, meaning that the loan must be paid off then. how big will the balloon payment be? (do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16))

+2
Answers (1)
  1. 7 October, 08:25
    0
    P=1560000

    APR=5.6%

    monthly interest, i=5.6%/12=7/1500 [fractions keep exact values]

    R=1+i=1+7/1500

    # of periods, n=30 years = 360 periods

    monthly payment, A

    A=PR^n (i) / (R^n-1)

    =1560000 * (1+7/1500) ^360 * (7/1500) / ((1+7/1500) ^360-1)

    =$8955.632

    At the end of eight years,

    number of periods, n1 = 8*12 = 96

    If paid off at the end of 8 years, value of loan then

    future value of principal

    F1=PR^n1=1560000 * (1+7/1500) ^96=2439135.635

    future value of payments

    F2=A (R^n1-1) / i=8955.632 * (1+7/1500) ^96-1) / (7/1500) = 1081485.620

    Therefore the balloon payment

    = future value of principal (owing) - future value of payments (paid)

    =F1-F2

    =2439135.635-1081485.620

    =1357650.0152

    Round to two places after decimal to get final answer.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You have just arranged for a $1,560,000 mortgage to finance the purchase of a large tract of land. the mortgage has an apr of 5.6 percent, ...” in 📙 Mathematics if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers