User`s guide

Time Value of Money Calculations

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Example: A Mortgage With a Balloon Payment

You’ve obtained a 25 year, 172,500 mortgage at 8.8% annual interest. You anticipate that

you will own the house for four years and then sell it, repaying the loan with a balloon

payment. What will your balloon payment be?

Solve this problem using two steps:

1. Calculate the loan payment using a 25 year term.

2. Calculate the remaining balance after 4 years.

Step 1

First calculate the loan payment using a 25 year term.

Table 6-5 Calculating the maximum purchase price

Keys Display Description

JG\Í

12.00 Sets periods per year.

D:\Ú

360.00 Stores the length of the

mortgage (30 × 12).

:É

0.00 Pays mortgage off in 30 years.

j7VÒ

7.50 Stores interest rate.

dD:yÌ

-930.00 Stores desired payment (money

paid out is negative).

133,006.39 Calculates the loan you can

afford with a 930 payment.

1JG:::4

145,006.39 Adds 12,000 down payment

for the total purchase price.