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1. You need a 20-year, fixed-rate mortgage to buy a new home for $200,000. Your mortgage bank...

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Finance

1. You need a 20-year,fixed-rate mortgage to buy a new home for $200,000. Your mortgagebank will lend you the money at a 7 percent APR for this 240-monthloan. However, you can afford monthly payments of only $800, so youoffer to pay off any remaining loan balance at the end of the loanin the form of a single balloon payment.

Required:

How large will thisballoon payment have to be for you to keep your monthly payments at$800?

$406,646.7

$391,006.44

$96,813.99

$84,084.56

$379,276.25

Answer & Explanation Solved by verified expert
3.7 Ratings (496 Votes)
Calculate the future value of the 200000 as followsFuture    See Answer
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Transcribed Image Text

1. You need a 20-year,fixed-rate mortgage to buy a new home for $200,000. Your mortgagebank will lend you the money at a 7 percent APR for this 240-monthloan. However, you can afford monthly payments of only $800, so youoffer to pay off any remaining loan balance at the end of the loanin the form of a single balloon payment.Required:How large will thisballoon payment have to be for you to keep your monthly payments at$800?$406,646.7$391,006.44$96,813.99$84,084.56$379,276.25

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