Mr. Bill S. Preston, Esq., purchased a new house for $150,000. He paid $30,000 upfront and...

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Mr. Bill S. Preston, Esq., purchased a new house for $150,000. He paid $30,000 upfront and...

Mr. Bill S. Preston, Esq., purchased a new house for $150,000. He paid $30,000 upfront and agreed to pay the rest over the next 25 years in 25 equal annual payments that include principal payments plus 11 percent compound interest on the unpaid balance.

a. Mr. Bill S. Preston, Esq., purchased a new house for $150,000 and paid $30,000 upfront. How much does he need to borrow to purchase the house?

b. What will these equal payments be?

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Answer 1

Answer #1

Price of house				150000
Less: Amount borrowed				30000
Amount borrowed				120000

Amount borrowed				120000
Divide: Annuity PVF at 11% for 25 yrs				8.42174
Annual Payment				14248.84

Answer is 14248.84

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Answer 2

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