My Math Forum Annual payment (maturity of the mortgage)

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 October 28th, 2013, 01:16 PM #1 Newbie   Joined: Oct 2013 Posts: 6 Thanks: 0 Annual payment (maturity of the mortgage) Suppose that you have signed a mortgage of one hundred thousand euros today. The interest has been ?xed at $r = 0,07%$ annual. The payments will be annual starting next year and there will be 30 payments in total (one each year with the same maturity/amount/principal). Compute the equal annual payment (maturity of the mortgage).
October 28th, 2013, 05:36 PM   #2
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Re: Annual payment (maturity of the mortgage)

Quote:
 Originally Posted by Fitim Suppose that you have signed a mortgage of one hundred thousand euros today. The interest has been ?xed at $r = 0,07%$ annual. The payments will be annual starting next year and there will be 30 payments in total (one each year with the same maturity/amount/principal). Compute the equal annual payment (maturity of the mortgage).
You're making me nervous with all that wording! Looks like it's as simple as:
$100,000 is borrowed, to be repaid over 30 years with equal annual payments, interest rate of 7% annually. ($ means dollars!)

A = Amount borrowed ($100,000) n = number of payments (30) i = interest factor (.07) P = Payment required (?) Formula: P = Ai / [1 - 1/(1 + i)^n] P = 100000(.07) / [1 - 1/(1+.07)^30] = 8058.64035...; so$8,058.64

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