D13 Balloon vs Drop pmts

Question 1

what is that last payment that is smaller than the level payments called?

Answer 1

drop payment

Question 2

what is that last payment that is bigger than the level payments called?

Answer 2

balloon payment

Question 3

how do you find a drop payment?

Answer 3

use TVM function on calc to find n then round n down. Then L*(1+i)^(rounded down n) - R s angle round down n = new value. Then multiply by the accumlation factor

Question 4

how do you find a ballon payment?

Answer 4

use TVM function on calc to find n then round n down. Then L*(1+i)^(rounded down n) - R s angle round down n = new value. Then add R