Edmund LLC is purchasing an office building for $5 million. Aslan Financial is providing a $3,000,000 mortgage to help finance this purchase. This will be a 10- year balloon mortgage amortized over 30 years with monthly payments at an interest rate of 7.25 percent.
The first payment on this mortgage will be due on March 1st.
A) How much interest will Brownback pay during the first tax year? (Assume that the tax year corresponds with the calendar year.)
B) How much interest will Edmund pay during the second tax year?
C) How large will the balloon payment be at the end of the loan’s term?