Question

You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will your remaining balance after 9 years.

Answer 1

$258077.04

Step-by-step explanation:

The cost of the house is $350,000

Apply compound interest formula

A=P(1+r/n)^nt

where

A=amount of loan after the period has elapse=?

P=principal deposit amount=$50,000

r=rate of interest in decimal form=0.07%

t=time taken for the loan to mature

n=1

A=$50,000(1+0.07)^9

A=$50,000*(1.07)^9

A=$91922.96

Remaining balance =$350000-$91922.96=$258077.04