We have a mortgage of 30 years, with a principal of $60,000 at an interest rate of 7.5%.
We can calculate the annual payments with the annuity formula, with PV = 60000, r = 0.075 and n = 30:
[tex]\begin{gathered} PV=A\cdot\frac{1-(1+r)^{-n}}{r} \\ 60000=A\cdot\frac{1-(1.075)^{-30}}{0.075} \\ 60000\approx A\cdot\frac{1-0.114221}{0.075} \\ 60000\approx A\cdot\frac{0.88578}{0.075} \\ 60000\approx A\cdot11.81 \\ A\approx\frac{60000}{11.81} \\ A\approx5080.27 \end{gathered}[/tex]Answer: he wil be paying $5080.27 each year (assuming yearly payments).
