Question

Time Remaining: 01:56.19 Submit Quiz Quiz: Chapter 4 Quiz (Copy) This Question: 1 pt 5 of 9 This Quiz: 9 pls possible You are thinking of purchasing a house. The house costs $250,000 You have $36.000 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 10% per year. What will be your annual payment if you sign this mortgage? The annual payment is (Round to the nearest dollar)

Answer 1

Year	PV factor 10% [1/(1+r)^]n
1	0.909
2	0.826
3	0.751
4	0.683
5	0.621
6	0.564
7	0.513
8	0.467
9	0.424
10	0.386
11	0.350
12	0.319
13	0.290
14	0.263
15	0.239
16	0.218
17	0.198
18	0.180
19	0.164
20	0.149
21	0.135
22	0.123
23	0.112
24	0.102
25	0.092
26	0.084
27	0.076
28	0.069
29	0.063
30	0.057
Total PV Factor	9.427

Cost of house	250,000.00	$
Down payment	36,000.00	$
Loan amount	214,000.00	$
Life of loan	30	Years
Interest rate	10%
Total PV factor	9.427
Annual payment	Loan amount/ Total PV factor
Annual payment	22,700.75	$