Question

Chin Woo bought a home for $160,000. He put down 20 percent. The mortgage is at 8 1/2 % for 25 years. By using the table in the handbook, his yearly payments are:

Answer 1

Down payment
160,000×0.20=32,000

128000=X[((1-(1+0.085)^(-25))/0.085]
Solve for x
X=12507.10

Answer 2

Answer:

His yearly payment is $12507.095

Step-by-step explanation:

We are given

Chin Woo bought a home for $160,000

He put down 20 percent

It means that down payment is 20% of price of home

and he took loan of remaining amount

so, present value is 80% of 160000

$PV=\frac{80}{100}\times 160000$

$PV=128000$

The mortgage is at 8 1/2 % for 25 years

so, r=8.5%=0.085

t=25

now, we can use payment formula

$P=\frac{r(PV)}{1-(1+r)^{-t}}$

now, we can plug values

$P=\frac{0.085\times 128000}{1-(1+0.085)^{-25}}$

now, we can solve for P

we get

$P=12507.095$

so,

His yearly payment is $12507.095