Question

Show what you need for each of your calculator keys when computing your answer.

Answer 1

Answer:

           $\large\boxed{\large\boxed{\ 10,470.57}}$

Explanation:

The monthly payment to pay a loan with constant rate is given by the formula:

      $Payment=Loan\times \bigg[\dfrac{r(r+1)^t}{(r+1)^t-1}\bigg]$

Where:

• r is the monthly compounded rate and it is equal to the APR (annual percentage rate) divided by 12: r = 5.5%/12 = 0.055/12

• t is the number of months: t = 60

Then, you can subsitute with the maximum payment to find the maximun amount you can afford  to borrow (loan):

     $\ 200=Loan\times \bigg[\dfrac{(0.055/12)((0.055/12)+1)^{60}}{((0.055/12)-1)^{60}-1}\bigg]$

      $\ 200=Loan\times 0.01910116$

     $Loan=\ 200/0.01910116=\ 10,470.57$