You need a 20-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.6 percent APR for this 240-month loan. However, you can afford monthly payments of only $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.

Required:

How large will this balloon payment have to be for you to keep your monthly payments at $850?

a. $615,590.98

b. $121,190.7

c. $597,123.25

d. $640,214.62

e. $135,283.94