Question

Jane is considering a 7/23 balloon mortgage with an interest rate of 4.15% to


purchase a house for $197,000. What will be her monthly payment for the first


7 years of the balloon mortgage?


O A. $945.98


O B. $933.64


O c. $900.00


O D. $957.62

Answer 1

Answer:

957.62

Step-by-step explanation:

Given the house price, P=$197,000, $n=12\times 30=360, i=0.0415/12$, the monthly payments, M, can be calculated as:

$M=P[\frac{i(1+i)^n}{(1+i)^{360}-1}]\\\\M=[\frac{\frac{0.0415}{12}(1+\frac{0.0415}{12})^360}{(1+\frac{0.0415}{12})^{360}-1}]\\\\M=957.62$

Hence, the monthly payment of the baloon mortgage is $957.62