Your cousin will sell you his coffee shop for $250,000, with "seller financing," at a 6.0% nominal annual rate. The terms of the

Question

2 years ago

3

Your cousin will sell you his coffee shop for $250,000, with "seller financing," at a 6.0% nominal annual rate. The terms of the

loan would require you to make 12 equal end-of-month payments per year for 4 years, and then make an additional final (balloon) payment of $50,000 at the end of the last month. What would your equal monthly payments be

Business

2 answers:

IgorLugansk [536] · Answer 1 · 2023-04-02T01:12:18+03:00

The equal monthly payments are $4,241.44.

<u>Explanation</u>:

The selling price of the coffee shop is $250,000 with seller financing at a 6.0% nominal annual rate. We have to pay 12 equal ends of monthly payments for 4 years. At the end of the last month, we have to pay $50,000.
Paying $4,241.44 for a year equals $50,892. Then $50,892 for four years equals $203,568. After paying this amount at the end of the last month we should pay $50,000.
So this equals $250,000.

Elenna [48] · Answer 2 · 2023-04-02T03:15:06+03:00

Equal monthly payment is$4947.10 .The Balloon payment $50,000 does not take a part in equated monthly payment for capital amount calculation but the interest of $50,000 will be added while calculating the interest

Explanation:

Calculation of monthly equalized installment $

Capital amount (250,000-50,000) 200,000

Interest for the I year $(250,000×6÷100 = 15000)$ 15000