Example: A Mortgage With a Balloon Payment. You've obtained a
25 year, $172,500 mortgage at 8.8% annual interest. You anticipate that
you will own the house for four years and then sell it, repaying the loan
with a balloon payment. What will your balloon payment be?
Solve this problem using two steps:
1. Calculate the loan payment using a 25 year term.
2. Calculate the remaining balance after 4 years.
Step 1. First calculate the loan payment using a 25 year term.
PV=172500
WR - 8896
N=25x12
PIYR=12
1
2
DN
299 | 300
PMT =?
End Mode
Set to End mode. Press Q@9 if BEGIN annunciator is displayed.
Keys:
Display:
Description:
Ow
0.00
Stores loan balance
after 25 years.
@0@@@@@
172,500.00
Stores original loan
balance.
(@С)@@®
8.80
Stores annual interest
Tate.
58
5: Time Value of Money Calculations