Question
In: Finance
You need a 22-year, fixed rate mortgage to buy a new home for $290,000. Your mortgage...
You need a 22-year, fixed rate mortgage to buy a new home for $290,000. Your mortgage bank will lend you the money at an annual interest rate of 6.5% APR and annual compounding. What is your annual payment?
Solutions
Expert Solution
Present value = Annuity * [1 - 1 / (1 + rate)^time] / rate
290,000 = Annuity * [1 - 1 / (1 + 0.065)^22] / 0.065
290,000 = Annuity * [1 - 0.25021] / 0.065
290,000 = Annuity * 11.5352
Annuity = $25,140.45
Annual payment will be $25,140.45
jeff jeffy answered 2 years agoRelated Solutions
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