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

The equal monthly payments are $4,241.44.            

Explanation:

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                      15000

(250,000×6÷100 = 15000)

Interest for the II year                      11250

(187,500×6÷100 = 11250)

Interest for the III year                       7500  

(125,000×6÷100 =7500)

Interest for the IV year                        3750

(62,500×6÷100=3750)                                                            ----------------

Total amount for monthly payments                                       $237,500

Equal monthly payment = 237,500÷48 =$4947.10

                                            = $4947.10

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