Problemyou need a 30-year fixed-rate mortgage to buy a new, Ask an Expert

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Problem:

You need a 30-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 360-month loan, with interest compounded monthly. However, you can only afford monthly payments of $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.

Required:

Question: What will be the amount of the balloon payment if you are to keep your monthly payments at $850?

$1,112,464
$1,113,316
$1,114,480
$1,115,840
$1,116,315

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162894

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