Kingston Development Corp. purchased a piece of property for $2.79 million. The firm paid a down payment of 15 percent in cash and financed the balance. The loan terms require monthly payments for 15 years at an annual percentage rate of 7.75 percent, compounded monthly. What is the amount of each mortgage payment

ANSWER

= $22,390.33

EXPLANATION

Amount of each mortgage =loan Balance /annuity factor

Loan balance

=( 100-15)% × $2.79 million.

=2.3715million.

Annuity factor

Monthly interest rate =7.75%/12 =0.65%

Number of months = 15× 12 = 180 months

Annuity factor

= (1- (1.0065)^(-180)/0.0065

=105.9162693

Monthly mortgage payment

=$2.3715 million/ 105.9162693

= $22,390.33

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