Independent solution

How to solve this Final Balloon Payment question

Setup

Setup

First solve the fractional level-payment term to identify the final payment date.

5,020=360an‾∣0.06255{,}020=360a_{\overline n|0.0625}
n=33.8483n=33.8483

Model

Model

Use 33 payment dates. The first 32 carry 360, while the final date carries 360 plus a residual R.

5,020=360a33‾∣0.0625+Rv335{,}020=360a_{\overline{33}|0.0625}+Rv^{33}

Compute

Compute

The time-33 residual is 288.7483.

R=288.7483R=288.7483
B=360+R=648.7483B=360+R=648.7483

Answer

Answer

The balloon payment is approximately 649, choice C.

B≈649(C)\boxed{B\approx649\quad\text{(C)}}

Calculator reproduction

BA II Plus keystrokes

Check END/BGN, period, sign, TVM, and cash-flow setup

  1. 33 · N; 6.25 · I/Y; 5020 · PV; 360 · +/− · PMT; CPT · FV−288.75Add the residual magnitude to the regular final-date payment of 360.