On January 1,2011,Alpha Enterprise signed a $100,000,6%,20-year mortgage note to buy a new warehouse.The mortgage will be repaid in a series of twenty equal annual installment payments.Calculate the amount of each payment.Round your answer to the nearest dollar.
A)$8,718
B)$5,000
C)$11,000
D)$6,000

Question

Quizplus · Accepted Answer

To calculate the amount of each payment, we can use the formula for a loan repayment:
Payment amount = (loan amount * interest rate)/(1-(1+interest rate)^-number of payments)
Plugging in the given values, we get:
Payment amount = (100,000 * 0.06)/(1-(1+0.06)^-20) = $8,718.28
Rounding to the nearest dollar gives us choice A: $8,718.

On January 1,2011,Alpha Enterprise Signed a $100,000,6%,20-Year Mortgage Note to Buy