You put 20% down on a home with a purchase price of $150,000,or $30,000.The remaining balance will be $120,000.A 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 correct answer is A. The monthly annuity payment under this schedule is $751.11. This can be calculated using the formula for the monthly annuity payment:P = (r * PV) / (1 - (1 + r)^(-n))where:P is the monthly annuity paymentr is the monthly interest rate (4.375% / 12 = 0.003646)PV is the present value of the loan ($120,000)n is the number of months in the payment schedule (20 years * 12 months/year = 240 months)Plugging these values into the formula, we get:P = (0.003646 * 120000) / (1 - (1 + 0.003646)^(-240))P = $751.11

You Put 20% Down on a Home with a Purchase