A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor made an agreement with the seller to finance the purchase over a 5-year period. The agreement stated that monthly payments stated that monthly payments would be made based on a 30-year amortization, but the balance owed at the end of year 5 would be paid in a lump-sum balloon payment. What was the size of the balloon payment if the interest rate on the loan was 6% per year, compounded monthly?
A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor made an agreement with the seller to finance the purchase over a 5-year period. The agreement stated that monthly payments stated that monthly payments would be made based on a 30-year amortization, but the balance owed at the end of year 5 would be paid in a lump-sum balloon payment. What was the size of the balloon payment if the interest rate on the loan was 6% per year, compounded monthly?
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 45P
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