This extended problem covers many of the features of a mortgage. You purchase a town house for $200,000. Since you are able to make a down payment of 10 percent ($20,000), you are able to obtain a $180,000 mortgage loan for 20 years at a 6 percent annual rate of interest. Use Appendix D to answer the questions. Round your answers to the nearest dollar.

1. What are the annual payments that cover the interest and principal repayment? $ __________

2. How much of the first payment goes to cover the interest? $ ___________

3. How much of the loan is paid off during the first year? $ ___________

4. What is the interest payment during the second year? $ ___________

5. What is the remaining balance after the second year? $ ___________

6. Why did the interest payment change during the second year? The annual -Select-increase/decrease in the amount owed -Select-increases/decreases each subsequent interest payment.