Chapter 5, Problem 35P

a.

Summary Introduction

To calculate: Amount of loan payment, if it was amortized for 3 years.

Balloon Payment:

It is total of that amount, which is paid at the end of the term of the loan. If there is a condition of paying entire principal amount in lump sum at the end of the term, then there is an involvement of balloon payment. Amount paid as balloon payment is generally higher in comparison of amount paid in monthly installments.

b.

Summary Introduction

To calculate: Amount of loan payment, if it was amortized for 30 years.

c.

Summary Introduction

To calculate: Balloon payment outstanding value at the end of three year after making payment of $7500 for next three years.