When you purchased your house, you took out a 30-year annual-payment mortgage with an interest rate of 6 percent per year (compounded annually). The annual payment on the mortgage is $12,000, paid at the end of each year. You have just made a payment and have now decided to pay the mortgage off by repaying the outstanding balance. What is the payoff amount if you have lived in the house for 12 years (so there are 18 years left on the mortgage)

Annual Payments refers to the total amount of payments expected to be paid or received, as applicable, under Material Contract divided by the total number of years the Material Contract is expected to be in effect.

A stream of equal cash flows with a set number of periods is known as an annuity.

We calculate the present value of the annuity to determine the payback amount for living in the house for 12 years. For staying in the house for 12 years, the payment amount is $129,931.24.

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$129,931.24

Explanation:

Annuity is a stream of equal cash flows that has a specified number of periods. To get the payoff amount for living in the house for 12 years, we calculate the present value of the annuity.

The payoff amount for living in the house for 12 years is $129,931.24.

Check the attached document for the calculation.

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