Question

John Doeber borrowed $150,000 to buy a house. His loan cost was 6% and he promised to repay the loan in 10 equal annual payments. What are John's annual payment amounts?

Answer 1

$20,380.16

Step-by-step explanation:

in order to find the annual payment, we can use the present value of an annuity formula:

present value = annual payment x PV annuity factor

• present value = $150,000
• PV annuity factor (6%, 10 periods) = 7.3601

annual payment = present value / annuity factor = $150,000 / 7.3601 = $20,380.16