Chapter 5, Problem 62SP

(Complex stream of cash flows) Roger Sterling has decided to buy an ad agency and is going to finance the purchase with seller financing—that is, a loan from the current owners of the agency. The loan will be for $2 million financed at an APR of 7 percent compounded monthly. This loan will be paid off over 5 years with end-of-month payments, along with a $500,000 balloon payment at the end of year 5. That is, the $2 million loan will be paid off with monthly payments, and there will also be a final payment of $500,000 at the end of the final month. How much will the monthly payments be?