Question

Consider a homebuyer/investor who plans to buy a new house, the price of which is $ 500,000. Suppose the buyer does not have any initial savings for the down payment. To buy the house, he needs to borrow $ 500,000 from a bank in the form of a mortgage loan. The mortgage is a 15-year-fixed-rate mortgage. If interest rate is 10 percent, compute the annual payment of the homebuyer.

Answer 1

$56,703

Step-by-step explanation:

P=R(1-(1+i)^-n/i

Where P=500,000

R=?

i=10%

n=15

500,000=R(1-(1+.1)^-15/.1

R=500,000/7.61

R=$56,703