Question

You decide to purchase a new home and need a ​$160,000 mortgage. You take out a...

You decide to purchase a new home and need a

​$160,000

mortgage. You take out a loan from the bank that has an interest rate of

7​%.

What is the yearly payment to the bank to pay off the loan in 10​ years?

FP​ =

​$nothing

​(Round your response to two decimal​ places.)

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Homework Answers

Answer #1

We can use the present value of the annuity formula:

Where,
PVA = Present value of the annuity
A = Annuity or yearly payment
i = Interest rate in decimal form (i.e 7% = 0.07)
n = Number of years

Therefore,

Therefore, the yearly payment will be $22,780.40

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