Answer:
$83,107.20
Explanation:
Amount available for monthly house payment = [$ 2000 * 35% ] - $ 150
= $700 - $150
= $550
Effective rate per month = 6.95% / 12 months = 0.00579 = 0.579%
No of periods = 30 years * 12 months = 360 months
Present Value = Amount available for monthly house payments * [P/A,0.579%,360]
[P/A,0.579%,360] =[(1 + i)^n - 1] / [( 1 + i)^n * I]= [(1 + 0.00579)^360 - 1] / [( 1 + 0.00579)^360 * 0.00579]
P/A,0.579%,360 = [7.99158 - 1] / [ 7.99158 * 0.00579]
P/A,0.579%,360 = 6.99158 / 0.04627
P/A,0.579%,360 = 151.104
Present Value = Amount available for monthly house payments * [P/A,0.579%,360]
Present Value = $550 * 151.104
Present Value = $83,107.20
Thus, the max amount she can par for the house is $83,107.20
