Problemyou need a 25- year fixed rate mortgage to buy a new, Ask an Expert

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Problem:

You need a 25- year, fixed rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.5 percent APR for this 300-month loan, with interest compounded monthly. However you can only afford monthly payments of $850, so you offer to pay any remaining loan balance at the end of the loan in the form of a single balloon payment.

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Question 1: What will be the amount of the balloon payment if you are to keep your monthly payments at $850? Please provide step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146856

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