Problem 6.42 – Balloon Payment Calculation for a Fixed-Rate Mortgage with Monthly Payment Constraint

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Calculate the size of a single balloon payment that an individual must pay at the end of a 30-year, fixed-rate mortgage to keep their monthly payments at $900, assuming a mortgage loan amount of $245,000, an APR of 4.8%, and a loan term of 360 months. (Your numbers will vary) To keep monthly payments, how large will this balloon payment have to be?

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