You put down 20% on a home with a purchase price of $150,000, or $30,000. The remaining balance will be $120,000. The bank will loan you this remaining balance at 4.375% APR. You will make monthly payments with a 20-year payment schedule. What is the monthly annuity payment under this schedule?
A) $751.11
B) $830.53
C) $910.12
D) $5,250.18

Question

Quizplus · Accepted Answer

The monthly annuity payment can be calculated using the formula:PMT = (P * r) / (1 - (1 + r)^(-n))where:PMT is the monthly annuity paymentP is the loan amountr is the monthly interest raten is the number of months in the payment scheduleIn this case, the loan amount is $120,000, the monthly interest rate is 4.375% / 12 = 0.003646, and the number of months in the payment schedule is 20 * 12 = 240.Plugging these values into the formula, we get:PMT = (120000 * 0.003646) / (1 - (1 + 0.003646)^(-240))PMT = $751.11Therefore, the monthly annuity payment is $751.11.

You Put Down 20% on a Home with a Purchase