Question

Ms. Maili Sirrus obtained a balloon loan of $237485 at a nominal rate of interest of 3.33 percent for 3 years. If repayment is scheduled at the end of every fifth day, obtain the level of the first few payments, assuming he will pay $ 36036 at the end of the term.

Round your final answer to 2 decimal places.

Answer 1

We shall solve this sum using the Financial calculator, as follows:

Balloon loan amount = $ 237,485

Thus, PV = $ 237,485

Pre-payment at the end of every fifth day.

Number of periods (N) = (3*365)/5 = 219

As loan is for 3 years and payment is done after every 5 days.

Interest rate (I/Y) = 3.33/ 365

We shall put the following inputs into the financial calculator:

N = 219

(1/Y) = 3.33/ 365 (No need to convert it into decimals)

PV = $ 237,485

FV = - $ 36,036

Solve for PMT

PMT = $ 932.41

Note: The answer will come as - 932.41 as we are required to pay (outflow) this amount.