You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash...

You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 8% per year. What will be your annual payment if you sign this mortgage?

Expert Solution

	Annual payment	[P×r×(1+r)^n]÷[(1+r)^n-1]

	Here,

1	Interest rate per annum	8.00%
2	Number of years	30
3	Number of compoundings per per annum	1
1÷3	Interest rate per period ( r)	8.00%
2×3	Number of periods (n)	30
	Loan amount (P)	$ 214,000	=250000-36000

	Annual payment	$ 19,009.07
		(214000×8%×(1+8%)^30)÷((1+8%)^30-1)

jeff jeffy answered 1 year ago

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