Question

John House has taken a $250,000 mortgage on his house at an interest rate of 6 percent per year. If the mortgage calls for 20 equal, annual payments, what is the amount of each payment?

Answer 1

Answer:

$21,796.14

Explanation:

Use the Time Value of Money techniques to calculate the amount of each installment (PMT)

PV = $250,000

i =  6 %

n = 20

P/yr = 1

FV = $0

PMT = ?

Using a Financial calculator to input the values as above, each annual instalment/payment will be $21,796.14.