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A bank is calling in a loan after 5 years. The expectation is that they will receive a lump sum (balloon) payment of $1,216,652.90 which
A bank is calling in a loan after 5 years. The expectation is that they will receive a lump sum (balloon) payment of $1,216,652.90 which accounts for the original principal amount plus the accrued interest of 4% per year. a. Draw the cash flow diagram from the bank's viewpoint. [3 pts] b. What was the original amount of the loan? [4 pts] c. If the loan were extended another 2 years, how much more would the balloon payment be at the end of year 7? [3 pts]
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