You have just arranged for a $1,520,000 mortgage to finance the purchase of a la

Question

You have just arranged for a $1,520,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 5.2 percent, and it calls for monthly payments over the next 25 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 answer to 2 decimal places, e.g., 32.16.)

You have just arranged for a $1,520,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 5.2 percent, and it calls for monthly payments over the next 25 years. However, the loan has an eight-year balloon payment, meaning that the loan must be paid off then.

Explanation / Answer

Balloon payment PV*(1+r)^n-P*((1+r)^n-1))/r Balloon payment $                                                                                                                                                                                            1,225,876.29 (1520000*(1+(0.052/12))^96)-PMT(5.2%/12,25*12,-1520000,0)*((1+(0.052/12))^96-1)/(0.052/12)

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