What is the annual payment on a $750,000 mortgage at 6.2% for 15 years?

To determine the annual payment on a mortgage, we use the formula for an annuity, which is applicable when calculating fixed payments over a set period with a fixed interest rate. The formula for the annual payment (A) can be expressed as:

[ A = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1} ]

Where:

• P is the principal amount (loan amount),

• r is the annual interest rate (expressed as a decimal),

• n is the total number of payments (number of years in this case, since payments are annual).

In this situation:

• P = $750,000

• r = 6.2% = 0.062

• n = 15 years

Plugging these values into the formula, we first need to calculate:

1. ( (1 + r)^n ):

[ (1 + 0.062)^{15} \approx (1.062)^{15} \approx 2.4583 ]

2. Then, calculate the numerator:

[ P \times r \times (1 + r)^n = 750,000 \times 0