Answer:
The yearly payment is $ 10047.60 ( approx )
Step-by-step explanation:
Since, the yearly payment of a loan is,
[tex]P=\frac{R(P.V.)}{1-(1+R)^{-n}}[/tex]
Where, R is the annual rate of interest ( in decimals ),
P is the present value of the loan,
n is the time ( in years ),
Given,
A home is bought for $140,000 at 20 % down payment,
Thus, the present value of the loan, P.V. = 140000(100-20)%
= 140000 × 80 %
= 140000 × 0.8
= $ 112,000
Annual rate of interest, R = 7.5 % = 0.075,
n = 25 years,
Hence, the annual payment is,
[tex]P=\frac{112000(0.075)}{1-(1+0.075)^{-25}}[/tex]
[tex]=\$ 10047.5952247\approx \$ 10047.60[/tex]
