start-up entrepreneur wants to determine how much he can borrow in the form of a fixed-rate 20-year loan from bank. The loan for 20 years carries a fixed interest rate of 9.00%. He estimates that he can pay a maximum of $25,000 annual repayment (interest plus principal).

How large a loan can he afford, assuming he makes steady repayments of $25,000 per year for 20 years? How much total interest will be paid over the 20-year life of the mortgage? How much interest will be paid during the first year of the mortgage? How much principal will be repaid in the first year? How much of the final $25,000 payment at the end of 20 years will be interest and how much will be principal?