Question

Your uncle will sell you his bicycle 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?

$4,029.37


$4,241.44


$4,464.67


$4,699.66


$4,947.01

Answer 1

Assuming you make an additional final (balloon) payment of $50,000 at the end of the last month, your monthly payments is:$4,947.01.

Monthly payment

Based on the given information we would make use of financial calculator to find the PMT by inputting the below data

PMT(Rate,NPER,PV,-FV,type)

Where:

Future value= $50,000

Present value= $250,000

Interest rate= 6%/12 = 0.5%

Nper= 4 years × 12= 48 months

Hence;

PMT=$4,947.01

Inconclusion your monthly payments is:$4,947.01.

Learn more about monthly payment here:your monthly payments is:$4,947.01.

Answer 2

$4,947.01

Step-by-step explanation:

In this question, we use the present value formula which is shown in the spreadsheet.

The NPER represents the time period.

Given that,

Future value = $50,000

Present value = $250,000

Rate of interest = 6% ÷ 12 months = 0.5 months

NPER = 4 years × 12 months = 48 months

The formula is shown below:

= PMT(Rate,NPER,PV,-FV,type)

The future value comes in negative

So, after solving this, the answer would be $4,947.01