Your firm has taken out a $549,000 loan with 8.1% apr (compounded monthly) for some commercial...

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Your firm has taken out a $549,000 loan with 8.1% apr(compounded monthly) for some commercial property. as is common incommercial real estate the loan is a 5 year loan based on 15 yearamortization. this means that your loan payments will be calculatedas if you will take 15 years to pay off the loan, but you actuallymust do so in 5 years. to do this you will make 59 equal paymentsbased on the 15 year amortization schedule and then make a final60th payment to pay the remaining balance.
a. What will your monthly payments be?
b. What will your final payment be?

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3.7 Ratings (467 Votes)

This question is a classic example of a balloon mortgage In order to solve this question first we need to see the monthly payment schedule and the total balance at the end of 59 payments Hence we pay for 59 months the ammortization cost over 15 years and the the 60th payment would be the balance amount Lets first calculate the monthly mortgage payment Total Loan value USD 549000 Rate of interest 81 compounded monthly Monthly rate of interest 008112 000675 which results in annualized interest rate of 84 Ammortization duration 15 years 180 months Monthly mortgage payment USD 5374 At the end of 59 months total payment 537459 317066 USD Balloon payment See Answer

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Your firm has taken out a $549,000 loan with 8.1% apr(compounded monthly) for some commercial property. as is common incommercial real estate the loan is a 5 year loan based on 15 yearamortization. this means that your loan payments will be calculatedas if you will take 15 years to pay off the loan, but you actuallymust do so in 5 years. to do this you will make 59 equal paymentsbased on the 15 year amortization schedule and then make a final60th payment to pay the remaining balance.a. What will your monthly payments be?b. What will your final payment be?