Q:
Joe just bought a house for $750,000, of which 65% was financed with a 20 year, 8% mortgage. If the payments are to made on a yearly basis, how much will be the mortgage payment in Year 19?
A) $12,461
B) $34,874
C) $49,653
D) $34,612
A:
The correct answer is: c)
Step 1: Compute the amount of the mortgage
65% of 750,000 = 487,500
Step 2: Compute the annual mortgage payment with your calculator:
n = 20
i = 8%
PV = 487,500
Therefore, PMT = $49,653

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