You have just arranged for a $1,640,000 mortgage to finance the purchase of a la

Question

You have just arranged for a $1,640,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 6.4 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))

You have just arranged for a $1,640,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 6.4 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.

Explanation / Answer

Monthly payment can be calculated in Excel as =PMT(6.4%/12,360,-1640000). This is equal to 10,258.30

Future value of the loan after 8 years can be calculated in Excel as =FV(6.4%/12,96,10258.3,-1640000). This is equal to $ 1,451,134.13

Hope this helped ! Let me know in case of any queries.

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