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Dan buys a property for $ 260,000. He is offered a 20​-year loan by the​ bank,...

Dan buys a property for $ 260,000. He is offered a 20​-year loan by the​ bank, at an interest rate of 7​% per year. What is the annual loan payment Dan must​ make?

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Answer #1

The annual loan payment is computed as shown below:

Buying price of property = Annual loan payment x [ [ 1 - 1 / (1 + r)n ] / r ]

$ 260,000 = Annual loan payment x [ [ 1 - 1 / (1 + 0.07)20 ] / 0.07 ]

$ 260,000 = Annual loan payment x 10.59401425

Annual loan payment = $ 260,000 / 10.59401425

Annual loan payment = $ 24,542.16 Approximately

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