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# You owe \$200,000 on a mortgage loan You wish to repay the loan with

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You owe \$200,000 on a mortgage loan. You wish to repay
the loan with 10 equal payments, one at the end of each
year for the next 10 years, and a separate final \$80,000
balloon payment at the end of 11 years. What is the
appropriate amount of each of the 10 equal annual
payments? The interest rate is 8% compounded annually.
Instrument BA II Plus calculator.
Solution
This problem can be solved in two steps using the TI BA II
Plus.
1) We need to find the PV of the \$80,000 balloon payment
made at the end of the year 11 with interest rate 8%.
FV = \$80,000
N = 11
I/Y = 8
Solving for PV we get = \$34,310.63
We will subtract the PV of the balloon payment from our
mortgage loan of \$200,000 to get:
\$200,000 - \$34,310.63 = \$165,689.37 This is the amount
we need to pay in 10 equal end of year instalments.
2) Solving for the annual payments:

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You owe \$200,000 on a mortgage loan. You wish to repay the loan with 10 equal payments, one at the end of each year for the next 10 years, and a separate final \$80,000 balloon payment at the end of 11 years. What is the appropriate amount of each of the 10 equal annual payments? The interest rate is 8% compounded annually. If possible, please explain how to find answer using Texas Instrument BA II Plus calculator. Solution This problem can be solved in two steps using the TI BA II Plus. 1) We need to find the PV of the \$80,000 balloon payment made at the end of the year 11 with interest rate ...
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