Dan buys a property for $250,000.He is offered a 20-year loan by the bank,at an interest rate of 6% per year.What is the annual loan payment Dan must make?
A)$21,796.14
B)$24,864.98
C)$32,684.66
D)$64,486.34
E)$13,250.00

Question

Quizplus · Accepted Answer

The annual loan payment can be calculated using the formula for an annuity: P = [rPV] / [1 - (1 + r)^-n], where P is the payment, r is the annual interest rate divided by the number of periods per year, PV is the present value of the loan, and n is the total number of payments. Here, r = 0.06, PV = $250,000, and n = 20. Plugging these values into the formula gives an annual payment of approximately $21,796.14.

Dan Buys a Property for $250,000