A balloon payment is a large amount that is paid when a loan’s term ends. In the case of a bond, the huge payment that is made at the maturity of a bond is called a balloon payment.
The principal amount of a loan is amortized in the loan’s total term and the remaining payment at the end (huge payment) is due.
Balloon payments are more common with the commercial consumers who plan to have a business that requires a relatively huge investment than the normal consumer, as the normal consumer typically can’t make the huge payment at the end of the loan’s term.
Zoso is a rental car company that is trying to determine whether
Gemini, Inc., an all-equity firm, is considering
You need a 30-year, fixed-rate mortgage to
You would like to buy the house and take the mortgage described
Audrey Sanborn has just arranged to purchase a $550,000
Triad Corporation has established a joint venture with Tobacco Road Construction,
For the company in the previous problem, what is the value
You want to buy a house that costs $100,000
You need a 30-year, fixed-rate mortgage to
Consider again the project described in Problem 1 (assume that the
