Compare and contrast the monthly and total repayments of the following alternative loans for $425,000.

1. Interest only over 10 years at a rate of 3.45%

2. Partially amortized over 15 years, with a balloon payment of $200,000, at a fixed rate of 3.70%.

3. Fully amortized over 30 years at a fixed rate of 3.75%.

Present Value-Annuity: 1 PV = C r r(1+r)" Present Value: FV. PV = (1+r)" = FV [a+b)] 1 (1 + r)" Fully Amortizing Loan Repayments: PMT = P 1- 112 (1+2) FV P- Partial Amortizing Loan Repayments: PMT = 1 1 | 112 112(1+112 (1+ Partial Amortizing Loan Outstanding Balloon Payment: FV =, - P(1+i%2) + - PMT Definitions for mortgage formulas: PMT= monthly repayments, P= initial outstanding principal, FV = Balloon Balance, i= Nominal Annual Interest Rate, t = number of periods