Ballon Payment

You have a loan outstanding. It requires making

5

annual payments at the end of the next

5

years of

$ 4 000

each. Your bank has offered to allow you to skip making the next

4

payments in lieu of making one large payment at the end of the loan's term in

5

years. If the interest rate on the loan is

7.05 %

what final payment will the bank require you to make so that it is indifferent between the two forms of payment?