You Put 20% Down on a Home with a Purchase

question 39

Multiple Choice

You put 20% down on a home with a purchase price of $300,000.The down payment is thus $60,000,leaving a balance owed of $240,000.The bank will loan the remaining balance at 4.28% APR.You will make annual payments with a 20-year payment schedule.What is the annual annuity payment under this schedule?

• A)$18,100.23
• B)$22,625.29
• C)$12,000.00
• D)$33,785.23

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Definitions:

Zero-Coupon Bond

A type of bond that does not pay periodic interest payments and is instead issued at a deep discount to its face value.

Implicit Interest

The cost of borrowing that is not explicitly stated as an interest rate, often factored into the terms of leases or other financial agreements.

Face Value

The nominal or dollar value printed on a security, such as a bond or stock, representing its legal worth.

Effective Annual Yield

The interest rate on an investment or loan, which is compounded more than once per year, represented as an annual rate.