You Have to Make a Balloon Payment on Your House

question 16

Multiple Choice

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 will you have to place in the account today to have the $15,000 in five years? To solve this problem you would use the formula for the

• A)future value of an ordinary annuity.
• B)present value of a lump sum.
• C)present value of an ordinary annuity.
• D)future value of a lump sum.

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Definitions:

Service Charge

A fee collected for the provision of a service, often added to the cost of services in areas like hospitality, banking, and real estate.

Refuse to Pay

The act of intentionally not providing payment for a product, service, or debt when payment is due.

Provisional Credits

Temporary credits issued to a bank account, often while a transaction is under review or a dispute is being resolved, which can be reversed depending on the outcome.

Dishonor of a Check

The refusal by a bank to pay the amount stated on a check due to insufficient funds or other reasons.