Question
You have offered to loan your cousin $220,000 today so that he can purchase a home. The annual interest rate that you are charging your
You have offered to loan your cousin $220,000 today so that he can purchase a home. The annual interest rate that you are charging your cousin on this loan is 4%. The loan will be paid off using a balloon mortgage schedule with the following terms.
a) 20 annual, end-of-year payments, with the first payment occurring one year from today.
b) The last payment will occur 20 years from today and will be a large balloon payment of $60,000.
c) Each annual payment in Years 1 through 19 will be set to a value of $X.
What does the annual payment in Years 1 through 19 need to be (what is the value of $X)?
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