Question

You can afford a $950 per month mortgage payment. You've found a 30 year loan at 7% 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?

Answer 1

Based on the amount to be paid per month, the size of the loan you can afford is $142,792.19.

The total amount you pay to the loan company is $342,000.

The interest on the money is $199,207.81.

What is the size of the loan?

The size of the loan is the present value associated with that loan payment that you can afford:

950 = (7/12% x Present value) / ( 1 - (1 + 7/12%)⁻⁽³⁰ ˣ ¹²⁾

950 = (7/12% x Present value) / 0.8767

Present value = $142,792.19

The total amount of money paid is:

= Number of periods x Payment per period

= 30 years x 12 months per year x 950

= $342,000

The interest is:

= 342,000 - 142,792.19

= $199,207.81.

Find out more on interest payments on loans at brainly.com/question/13005100

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