Question

consider a loan for $300,000 with 20 annual payments and an interest rate of 5%. What is the payment amount with a balloon payment of $20,000:? $22,258.22 $22,560.65 $22,863.07 $23,165.50 $23,467.92

Answer 1

Amount Borrowed = $300,000
Number of Payments = 20
Annual Interest Rate = 5%
Balloon Payments = $20,000

Annual Payment * PVIFA(5%, 20) + $20,000 * PVIF(5%, 20) = $300,000
Annual Payment * (1 - (1/1.05)^20)/0.05 + $20,000 / 1.05^20 = $300,000
Annual Payment * 12.4622 + $7,537.790 = $300,000
Annual Payment * 12.4622 = $292,462.21
Annual Payment = $23,467.92

So, Annual payment is $23,467.92