Order these loans from highest monthly payment to lowest monthly payment. (Enter

Question

Order these loans from highest monthly payment to lowest monthly payment. (Enter 1 as your answer to designate loan with highest payment, 2 as loan with second highest payment, and so on up to 5 to designate loan with lowest payment.) Each of the following loans is for $300,000 and is a fixed rate mortgage with a 3.5% interest rate. Assume 30 years.

Balloon payment of $500,000 is due at maturity

Balloon payment of $250,000 is due at maturity

The loan is fully repaid at maturity

Interest-only payments for the duration of the loan

Balloon payment of $100,000 is due at maturity

Explanation / Answer

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Present Value of Loan $300,000 Interest Rate 3.50% Term of loan 30 years Loan # Balloon Payment Monthly payment Formula Used RANKS 1 500000 $560.24 =PMT(3.5%/12,30*12,-300000,500000,0) 5 2 250000 $953.69 =PMT(3.5%/12,30*12,-300000,250000,0) 3 3 0 $1,347.13 =PMT(3.5%/12,30*12,-300000,0,0) 1 4 300000 $875.00 =PMT(3.5%/12,30*12,-300000,300000,0) 4 5 100000 $1,189.76 =PMT(3.5%/12,30*12,-300000,100000,0) 2

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