To buy a new house you must borrow $155,000. To do this you take out a...
To buy a new house you must borrow $155,000. To do this you take out a $155,000, 30-year, 9 percent mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principal and 9 percent interest on the declining balance. How large will your annual payments be?
Homework Answers
| Annual payment | = | Loan amount | / | Present value of annuity of 1 | |||
| = | $ 1,55,000 | / | 10.27365 | ||||
| = | $ 15,087.13 | ||||||
| Working: | |||||||
| Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where, | ||||
| = | (1-(1+0.09)^-30)/0.09 | i | 9% | ||||
| = | 10.27365404 | n | 30 | ||||
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