(Annuity payments) To buy a new house, you must borrow $150,000. To do this, you take...

Question

Question

business finance

Answer 1

Answer #1

Annual payment (PMT) on mortgage loan can be calculated with the help of PV of an Annuity formula

PV = PMT * [1-(1+i) ^-n)]/i

Where,

Present value (PV) =$150,000

PMT = Annual payment =?

n = N = number of payments = 20 years

i = I/Y = interest rate per year = 12%

Therefore,

$150,000 = PMT* [1- (1+12%) ^-20]/12%

= $20,081.82

The amount of your annual payment will be $20,081.82

Answer 2

Similar Homework Help Questions

To buy a new house you must borrow $155,000. To do this you take out a...

To buy a new house you must borrow $155,000. To do this you take out a $155,000, 30-year, 9 percent mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principal and 9 percent interest on the declining balance. How large will your annual payments be?
(Loan amortization) To buy a new house you must borrow $ 140 comma 000$140,000. To do...

(Loan amortization) To buy a new house you must borrow $ 140 comma 000$140,000. To do this you take out a $ 140 comma 000$140,000, 3030-year, 88 percent mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principal and 88 percent interest on the declining balance. How large will your annual payments be?
You borrow money (take out a mortgage) to buy a house. You borrow $800,000 which you...

You borrow money (take out a mortgage) to buy a house. You borrow $800,000 which you will pay back with 10 equal payments made at the end of each of the next 10 years. The annual interest rate is 7 percent. Your first payment will be ____ principal payment, and _____ interest paid.

You need $300,000 to buy a house. You decide to borrow money from the bank to...

You need $300,000 to buy a house. You decide to borrow money from the bank to finance your mortgage. Assume that the bank charges a fixed annual interest rate of 4.50 percent and the term of the loan is 30 years. If you are required to make an equal payment every year for 30 years to pay off the loan, what is the annual payment? (Note that banks typically require monthly mortgage payments. For this problem, however, lets assume for...
17. You borrow $196,000 to buy a house. The annual mortgage rate is 5% and the...

17. You borrow $196,000 to buy a house. The annual mortgage rate is 5% and the loan period is 25 years. Payments are made monthly. If you pay the mortgage according to the loan agreement, how much payment will you pay each month?
You borrow $150,000 to purchase a house. You will make annual payments over the next 10 years to repay the loan. Assumin...

You borrow $150,000 to purchase a house. You will make annual payments over the next 10 years to repay the loan. Assuming that your interest rate is 12%, what is amount of principal remaining at the beginning of year 2(after the first payment)? $132,000 $141,452 $145,500 $138,740 Please use financial calculator :) Thank you!

You borrow $230,000 to buy a house. The mortgage rate is 4.5 percent and the loan...

You borrow $230,000 to buy a house. The mortgage rate is 4.5 percent and the loan period is 25 years. Payments are made monthly. If you pay the mortgage according to the loan agreement, how much total interest will you pay? $147,027 $153,524 $164,319 $160,408 $141,406 please show work using annuity or growing annuity formulas
1) You wish to borrow $150,000 from a lending institution for the purchase of a house....

1) You wish to borrow $150,000 from a lending institution for the purchase of a house. The bank will lend this amount at an Annual Percentage Rate of 4.5% to be paid-off with equal monthly mortgage payments over a 30-year period. This is a 4.5% APR, 30-year fixed-rate mortgage loan. You wish to know how this loan will affect your federal income tax burden, as only the interest paid on a home mortgage, not the principal, is tax deductible. Construct...
You want to buy a house that costs $210,000. You have $21,000 for a down payment,...

You want to buy a house that costs $210,000. You have $21,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $189,000. However, the realtor persuades the seller to take a $189,000 mortgage (called a seller take-back mortgage) at a rate of 8%, provided the loan is paid off in full in 3 years. You expect to inherit $210,000 in 3 years, but right now all you have is $21,000, and...

This morning, you borrowed $150,000 to buy a house. The mortgage rate is 7 percent. The...

This morning, you borrowed $150,000 to buy a house. The mortgage rate is 7 percent. The amortized loan requires you to pay $10,000 in principal plus interest each year over 15 years. The first payment is due one year from today. How much is the second payment?