Question

Order these loans from highest monthly payment to lowest monthly payment. (Enter 1 as your answer to designate loan with highest payment, 2 as loan with second highest payment, and so on up to 5 to designate loan with lowest payment.) Each of the following loans is for $300,000 and is a fixed rate mortgage with a 3.5% interest rate. Assume 30 years.

Balloon payment of $500,000 is due at maturity

Balloon payment of $250,000 is due at maturity

The loan is fully repaid at maturity

Interest-only payments for the duration of the loan

Balloon payment of $100,000 is due at maturity

Answer #1

Hello Sir/ Mam

Present Value of Loan | $300,000 | |||

Interest Rate | 3.50% | |||

Term of loan | 30 years | |||

Loan # | Balloon Payment | Monthly payment | Formula Used | RANKS |

1 | 500000 | $560.24 | =PMT(3.5%/12,30*12,-300000,500000,0) | 5 |

2 | 250000 | $953.69 | =PMT(3.5%/12,30*12,-300000,250000,0) | 3 |

3 | 0 | $1,347.13 | =PMT(3.5%/12,30*12,-300000,0,0) | 1 |

4 | 300000 | $875.00 | =PMT(3.5%/12,30*12,-300000,300000,0) | 4 |

5 | 100000 | $1,189.76 | =PMT(3.5%/12,30*12,-300000,100000,0) | 2 |

I hope this solves your doubt.

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