You want to buy a house that costs $100,000. You have $10,000 for a down payment, but
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a. If the loan was amortized over 3 years, how large would each annual payment be? Could you afford those payments?
b. If the loan was amortized over 30 years, what would each payment be? Could you afford those payments?
c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be?
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Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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