Lydia bought a home for $140,000. She put 20% down with a mortgage rate of 7.5% for 25 years. What are her yearly payments? A. $1,776.00 B. $12,415.20 C. $9,932.16 D. $9,329.61

Answer:The correct option is C. $9,93216Step-by-step explanation:Consider the provided information.Lydia bought a home for $140,000. She put 20% down with a mortgage rate of 7.5% for 25 years. That means now she need to pay only 80%.140000 × 80 %= $112,000Therefore she borrowed $112,000.Mortgage rate of 7.5%=0.075 per year.Monthly rate of interest = [tex]\frac{0.075}{12} =0.00625[/tex]Number of number of payments is:12(25) = 300We can calculate the monthly payment c by using the formula:[tex]c=\frac{rP(1+r)^N}{(1+r)^N-1}[/tex]Where, r is the monthly rate of interest.  P is the borrowed amount.  N loan's term.Substitute the respective values in the above formula.[tex]c=\frac{0.00625\times 112000(1+0.00625)^{300}}{(1+0.00625)^{300}-1}[/tex][tex]c=\frac{700(1+0.0625)^{300}}{(1+0.0625)^{300}-1}\approx827.67[/tex]Hence, the monthly payment is $827.67.We need to find yearly payment, therefore. $827.67×12≈$9932.04Hence, the correct option is C. $9,93216