Question

anyone know financial algebra ?

Answer 1

i figured out that last one .... the balloon is the remaining balance left on the principle. You would have to keep track of how much of a payment does towards interest, adn how much goes to paying off the principal

Answer 2

@amistre64 so what do we have to do ? like formula wise ?

Answer 3

is this a new problem, or the same balloon payment from last time?

Answer 4

from what i read up on, the 20/6 was a term for payments related to a 20 year mortgage, to be paid in 6 years, then the balloon, which is the balance of the principal is to be paid.

Answer 5

@amistre64 thats the problem.

Answer 6

@amistre64 did you figure it out ?

Answer 7

i think i figured something out, were there any options to choose from?

Answer 8

okay my teacher must have graded me on that assignment already because it's not in my reach anymore . Can you help me on something else about Cash Management ? @amistre64

Answer 9

to keep things straight in my head, B for balance, and P for payment
\[B_1 = B_o(\cancel{1+\frac{r}{12}}^k)-P(1)\]
\[B_2 = B_o(k)^2-P(1+k)\]
\[B_3 = B_o(k)^3-P(1+k+k^2)\].....
\[B_n = B_o(k)^n-P(1+k+k^2+...+k^{n-1})\]
\[B_n = B_o(k)^n-P(\frac{1-k^n}{1-k})\]
now, when n=12*20, Bn = 0
\[0 = B_o(k)^{240}-P(\frac{1-k^{240}}{1-k})\]
\[B_o(k)^{240}=P(\frac{1-k^{240}}{1-k})\]
\[B_o(k)^{240}(\frac{1-k}{1-k^{240}})=P\]
P = 305500(1+.0575/12)^(240) (1-(1+.0575/12))/(1-(1+.0575/12)^(240))
= 2144.87

the part i havent figured out is how much of the principal balance is paid of in 6 years

Answer 10

I'm going to write this in my notes for my test.

Answer 11

im thinking the balloon is the balance left over at the end of 6 years; 6*12 = 72

\[B_{72}=B_o(k)^{72}-P\frac{1-k^{72}}{1-k}\]
305500(1+.0575/12)^(72) - 2144.87(1-(1+.0575/12)^(72))/(1-(1+.0575/12))
= 247,111.20

Answer 12

yes thats what i got but its not an answer choice but its close to one.

Answer 13

$206,311.68

$401,542.25

$152,285.77

$249,295.69