You are thinking of purchasing a house. The house costs $200,000. You have $29,000 in cash...

You are thinking of purchasing a house. The house costs $200,000. You have $29,000 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 7% 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	7.00%
2	Number of years	30
3	Number of compoundings per per annum	1
1÷3	Interest rate per period ( r)	7.00%
2×3	Number of periods (n)	30
	Loan amount (P)	$ 171,000	=200000-29000

	Annual payment	$ 13,780.28
		(171000×7%×(1+7%)^30)÷((1+7%)^30-1)

jeff jeffy answered 1 year ago

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