You have to make a balloon payment on your house five years from now of $15,000.If money can earn a average of 6 percent a year for the five year period,how much interest will you earn on your deposit in five years?
A)$3,791.13
B)$3,807.00
C)$5,073.00
D)$5,101.50

Question

Quizplus · Accepted Answer

To find the interest earned, first calculate the present value of the $15,000 balloon payment using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of years. Then, subtract the present value from the future value to find the interest earned. The present value is $11,208.87, and the interest earned is $15,000 - $11,208.87 = $3,791.13.

You Have to Make a Balloon Payment on Your House