In a chart, calculate and present the cost of borrowing based upon the following: ▪ Principal borrowed of $89,000 ▪ 12 Annual payments a year ▪ Monthly payments are $1,100 ▪ 8.75% interest rate ▪ 72 total payments ▪ Period interest rate 1% What would be the final payment/balloon payment due on month 72 to be settled with this obligation?

You want to know the balloon payment in month 72 on a loan of $89000 at 8.75% with monthly payments of $1100. (or interest of 1% per month)

Spreadsheet

Your "chart" is conveniently provided by a spreadsheet. Each month, the amount of interest is computed by multiplying the periodic rate by the previous balance. That interest is added to the balance, and the payment is subtracted from that total to get the new balance. Interest is rounded to the nearest cent each month, as a financial institution would do.

In month 72, the balloon payment will be equal to the sum of the previous balance and the interest due.

The attachment shows (parts of) two amortization schedules. The left schedule is for an interest rate of 8.75%, which computes to a monthly rate of 0.7291666...% = (35/48)%. The schedule on the right is for a monthly interest rate of 1%.

Since the problem statement gives two different interest rates, you need to choose the applicable schedule.

Months 13–60 are hidden so that we can fit the chart into an attachment of suitable size. They are computed the same way as all the other lines of the chart.

For the different interest cases in your problem statement, the balloon payments are ...

8.75% annual: $47589.23
1% monthly: $68110.90

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Additional comment

The second attachment figures the final payment, assuming interest is not rounded each month. You can see that it makes a difference of a few cents after 72 months. (The "future value" app computes the balance after a payment of $1100 in month 72. Since we want the balance before that payment, the computation shown adds 1100 to the app result.) Of course, the app doesn't provide a chart.