You are thinking of purchasing a house. The house costs $400,000. You have $57,000 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 5% per year. What will be your annual payment if you sign this mortgage?
Total borrowings=(400,000-57,000)=$343,000
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
343,000=Annuity[1-(1.05)^-30]/0.05
343,000=Annuity*15.37245103
Annuity=343,000/15.37245103
=$22312.64(Approx).
You are thinking of purchasing a house. The house costs $400,000. You have $57,000 in cash...