Answer:
Time period required to pay off the mortgage = 18 years
Explanation:
Note: This question is incomplete and lacks necessary data to solve. But I have found that necessary data on the internet, which I have written down and solved the question accordingly.
Data Missing:
Buying Cost of House = $320000
Interest rate = 7%
Annual Mortgage Payment = $25525.8
Now, we are required to calculate the time period required to pay off the mortgage.
Solution:
Data Given:
Increase in annual payment percentage = 5%
So,
Formula:
P = C + C
+ C
+ ........ + C
Where,
P = Buying Cost of House = $320000
i = interest rate = 7% = 0.07
A = Increase in annual payment percentage = 5% = 0.05
C = Annual Mortgage Payment = $25525.8
P = C + C
+ C
+ ........ + C
In this formula, we have all the required things expect the value of n, which we have to calculate.
n = Time period required to pay the mortgage.
So,
$320000 = 25525.8 + 25525.8
+ 25525.8
+ ..... + 25525.8
Taking 25525.8 common,
320000 = 25525.8 ( +
+
+ .... +
)
320000/25525.8 = ( +
+
+ .... +
)
12.536 = ( +
+
+ .... +
)
Taking e common:
12.536 =
Taking Ln to solve for n, we get:
n = 17.89
n ≈ 18
n = 18 years
Hence, Time period required to pay off the mortgage = 18 years