Step 2. Calculate the balloon payment after 4 years.

894.33 &

Stores rounded PMT value

 for exact payment amount (no fractional cents).*

4 @



Figures and stores number

 

 

 

of payments in 4 years.

 Calculates balloon payment after four years. This amount plus last monthly payment repays the loan.

Savings Calculations

Example: A Savings Account. You deposit $2,000 into a savings account that pays 7.2% annual interest, compounded annually. If you make no other deposits into the account, how long will it take for the account to grow to $3,000? Since this account has no regular payments (PMT=0), the payment mode (End or Begin) is irrelevant.

3,000

0

7.2 1

_2,000

*The PMT stored in the previous step is the 12-digit number—894.330557971. The calculation of the balloon payment must use the actual monthly payment amount: the rounded number $894.33, an exact dollars-and-cents amount.

5: Time Value of Money 71

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