Question 22.66

image 36. (Requires a spreadsheet) A bank or credit union may offer to let you agree in advance to skip a payment (e.g., on a car loan but usually not on a mortgage or a credit card)—in exchange for a processing fee (such as $35) to be added to the principal. If you skip the payment, interest continues to accrue for that month on the remaining principal plus the added processing fee. You continue regular payments as usual in the same amount as before, except that the last payment is a larger “balloon” payment to pay off the loan. Suppose that you borrowed $11,158.05 from your credit union for a 60-month home improvement loan at 9%. Verify that your monthly payment is $231.62 and that after 12 months of payments you still owe $9307.74. You receive an offer to skip the 13th payment, for $35 added to the principal, and you do so. How much will the balloon payment be?