Question

A loan of 200,000 is to be repaid with level monthly payments based on a 30-year amortization schedule. At the end of 7 years, the loan will be paid off with a balloon payment. The annual effective interest rate is 7%. Calculate the amount of the balloon payment. A 181,677 B 181,950 C 182,979 D 183,593 E 183,625

          A loan of 200,000 is to be repaid with level monthly payments based on a 30-year amortization schedule. At the end of 7 years, the loan will be paid off with a balloon payment. The annual effective interest rate is 7%.
Calculate the amount of the balloon payment.
A
181,677
B
181,950
C
182,979
D
183,593
E
183,625

A loan of 200,000 is to be repaid with level monthly payments based on a 30-year amortization schedule. At the end of 7 years, the loan will be paid off with a balloon payment. The annual effective interest rate is 7%.
Calculate the amount of the balloon payment.
A
181,677
B
181,950
C
182,979
D
183,593
E
183,625

Added by Jodi S.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Nick Johnson

07/08/2023

Step 1

The formula for calculating the monthly payment on a loan is: PMT = P * (r * (1 + r)^n) / ((1 + r)^n - 1) Where: PMT = monthly payment P = loan amount ($200,000) r = monthly interest rate (annual effective interest rate / 12) n = total number of payments (30 Show more…

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A loan of $200,000 is to be repaid with level monthly payments based on a 30-year amortization schedule. At the end of 7 years, the loan will be paid off with a balloon payment. The annual effective interest rate is 7%. Calculate the amount of the balloon payment. A) 181,677 B) 181,950 C) 182,979 D) 183,593 E) 183,625