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You are thinking of purchasing a house. The house costs $ 350 comma 000. You have...

You are thinking of purchasing a house. The house costs $ 350 comma 000. You have $ 50 comma 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 7 % per year. What will your annual payment be if you sign up for this​ mortgage?

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Answer #1

Answer:

Cost of house = $350,000

Down payment = $50,000

Borrowing = $350,000 - $50,000 = $300,000

Mortgage duration = 30 years

Interest rate = 7 % per year

Annual payments are to be made each year for 30 years.

To get annual payments, we will use PMT function of excel:

PMT (rate, nper, pv, fv, type)

PMT (7%, 30, -300000, 0, 0)

=24175.921053

Annual payment be if you sign up for this​ mortgage = $24,175.92

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