You take out a 25- year loan of $150,000 with a 8% annual interest rate. What are the annual payments?
A) $13,965
B) $13,427
C) $ 2,052
D) $14,052

Question

Quizplus · Accepted Answer

To calculate the annual payment of a loan, you can use the formula for an annuity, which in this case is a fixed payment made every year for a certain number of years at a certain interest rate. The formula to calculate the annual payment (A) is: A = P * [r(1+r)^n] / [(1+r)^n - 1], where P is the principal amount ($150,000), r is the annual interest rate (8% or 0.08), and n is the number of payments (25 years). Plugging in the values: A = $150,000 * [0.08(1+0.08)^25] / [(1+0.08)^25 - 1], which calculates to approximately $14,052.

You Take Out a 25- Year Loan of $150,000 with a 8