Question

Mortgage is for $300,000 for 30 years, Fixed interest rate = 7% per year.
Annual payments = $23,500

At end of 30 years, must make balloon payment. How much is the balloon payment?

Answer 1

I = PRT
I = 300,000 * 0.07 * 30
I = 630,000

630,000 + 630,000 = 930,000

23,500 * 30 = 705,000

930,000 - 705,000 = _______ balloon payment

Answer 2

Why is 630,000 added twice? and that doesn't = 930,000

Teacher said answer would be about 3 times the annual payment, like having to make 3 payments at the end.

Can someone please help?

Answer 3

My goof.

This line 630,000 + 630,000 = 930,000

should be 630,000 + 300,000 = 930,000

Be sure to subtract as I showed in the last step.