Question
You purchase a home and need to borrow $350,000. The bank is offering a 30-year loan that requires monthly payments and has a stated interest
You purchase a home and need to borrow $350,000. The bank is offering a 30-year loan that requires monthly payments and has a stated interest rate of 9% per year. What is your monthly mortgage payment? Now suppose that you can only afford to pay $2,500 per month. The bank agrees to allow you to pay this amount each month, yet still borrow the original amount. At the end of the mortgage in 30 years, you must make a balloon payment, that is, you must pay the remaining balance on the mortgage valued at year 30. What is the amount of the balloon payment you must make at the end of the mortgage? Provide the actual dollar amount of the balloon payment at year 30.
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