You put 20% down on a home with a purchase price of $250,000.The down payment is thus $50,000,leaving a balance owed of $200,000.The bank will loan the remaining balance at 3.91% APR.You will make annual payments with a 30-year payment schedule.What is the annual annuity payment under this schedule?
A)$18,100.23
B)$11,439.96
C)$6,666.67
D)$11,009.49

Question

Quizplus · Accepted Answer

The annual annuity payment can be calculated using the formula for the annual payment on an amortizing loan: $P = \frac{rPV}{1 - (1 + r)^{-n}}$, where $P$ is the annual payment, $r$ is the annual interest rate (as a decimal), $PV$ is the present value or loan amount, and $n$ is the number of payments. Here, $r = 0.0391$, $PV = \$200,000$, and $n = 30$. Plugging these values into the formula gives the annual payment, which is approximately \$11,439.96.

You Put 20% Down on a Home with a Purchase