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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?

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jepessoa

Answer:

$20,380.16

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

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