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## Finance

 Basic Finance Corporate Finance Financial Management Financial Econometrics Portfolio Management Risk Management Public Finance Business Law & Ethics

1) Amortization schedule with a balloon payment:

You wish to buy a house which costs= \$110,000. You have= \$11,000 for down payment, but your credit is such that mortgage companies won’t lend you required \$99,000. Though, realtor persuades seller to take a= \$99,000 mortgage (called a seller take-back mortgage) at a rate of= 7%, given the loan is paid off in full in three years. You expect to inherit= \$110,000 in three years; but right now all you have is= \$11,000 and you can pay for payments of no more than \$9,000 per year provided your salary. (The loan would call for monthly payments, but suppose end-of-year annual payments to make things simpler.)

a) If loan amortized over three years, Find how large would each annual payment be?

b) If loan were amortized over thirty years, what would each payment be?

c) What would loan balance be at ending of Year three?

d) What would balloon payment be?

Basic Finance, Finance

• Category:- Basic Finance
• Reference No.:- M915007

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