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?

Question

Quizplus · Accepted Answer

The annual loan payment can be calculated using the formula for an annuity: P = [r*PV] / [1 - (1 + r)^-n], where P is the payment, r is the interest rate per period, PV is the present value (loan amount), and n is the number of periods. Substituting the given values (r = 0.06, PV = $250,000, n = 20), the correct annual payment is approximately $21,796.14.

Dan Buys a Property for $250 000