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John House has taken a $250,000 mortgage on his house at an interest rate of 6% per year. If the mortgage calls for 20 equal, annual payments, what is the amount of each payment? Assume the first payment starts in 1 year.

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anthougo

Answer:

John House

The annual payment is:

= $21,796.14.

Explanation:

a) Data and Calculations:

Mortgage on his house = $250,000

Interest rate per year = 6%

Payment period = 20 years

Repayment method = equal payment annually

N (# of periods)  20

I/Y (Interest per year)  6

PV (Present Value)  250000

FV (Future Value)  0

Results

PMT = $21,796.14

Sum of all periodic payments = $435,922.78

Total Interest = $185,922.78