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Dan buys a property for $220,000 . He is offered a 30-year loan by the bank,...

Dan buys a property for $220,000 . He is offered a 30-year loan by the bank, at an interest rate of 7% per year. What is the annual loan payment Dan must make?

a. $17,729.01

b. $21,274.81

c. $24,820,61

d. $28,366.42

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Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

220,000=Annuity[1-(1.07)^-30]/0.07

220,000=Annuity*12.4090412

Annuity=220,000/12.4090412

=$17,729.01(Approx).

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