Problem 7-16

This extended problem covers many of the features of a mortgage. You purchase a town house for $250,000. Since you are able to make a down payment of 20 percent ($50,000), you are able to obtain a $200,000 mortgage loan for 15 years at a 4 percent annual rate of interest. Use Appendix D to answer the questions. Round your answers to the nearest dollar.

a. What are the annual payments that cover the interest and principal repayment? $

b. How much of the first payment goes to cover the interest? $

c. How much of the loan is paid off during the first year? $

d. What is the interest payment during the second year? $

e. What is the remaining balance after the second year? $