Assume you buy a car for $20,000 today and agree to pay $200 a month, beginning next month, for 4 years with a final payment also due 4 years from today to pay off any remaining balance. How large will that final payment be, if interest accrues at 5.9% per year, compounded monthly?
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There are 48 months in 4 years. This is a problem known as a balloon payment. On the BAII Plus, press 48 N, 5.9 divide 12 = I/Y, 20000 PV, 200 +/- PMT, CPT
FV. On the HP12C, press 48 n, 5.9 ENTER 12 divide i, 20000 PV, 200 CHS PMT, FV. Note that the answer will be displayed as a negative number. Make sure the
BAII Plus has the value of P/Y set to 1.