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Suppose that you take out a mortgage loan with the following characteristics: compounding period is monthly...

Suppose that you take out a mortgage loan with the following characteristics: compounding period is monthly loan is for $350,000 APR = 5% life of loan for the purpose of calculating the mortgage payments is 30 years the loan requires a balloon payment of the balance of the principal owed at the end of year 5, i.e., the balance owed immediately after the 60th payment. What is the size of the balloon payment? Do not round at intermediate steps in your calculation

Group of answer choices $321,400.56 $347,925 $250,142.27 $284,697.23

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Answer #1

1. Cumulative principal paid till 60th payment = $28599.44

2. Balloon payment = Loan Amount - Cumulative principal Paid

Balloon payment = 350000 - 28599.44

Balloon payment = $321400.56 Option A

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