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You can afford a $800 per month mortgage payment. You've found a 30 year loan at 8% interest. a) How big of a loan can you afford? b) How much total money will you pay the loan company? c) How much of that money is interest?

 Feb 22, 2022
 #1
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Use this formula to find the PV of 360 payments of $800 each at 8% compounded monthly:

 

PV=?; P=800; R=0.08/12; N=30*12;    PV=P*(((1 + R)^N - 1)*((1 + R)^-N)* R^-1)

 

PV==$109,026.80 - amount of mortgage you can afford.

 

$800  x  360 months ==$288,000 principal + interest paid to the loan company.

 

$288,000  -  $109,026.80 ==$178,973.20 - interest paid over 30 years.

 Feb 22, 2022
 #2
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Answer deleted; someone else answered the question.

 Feb 22, 2022
edited by geno3141  Feb 22, 2022

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