Answer:
$198,859.03
Step-by-step explanation:
The amortization formula is good for this. Fill in the given numbers and solve for the unknown.
A = P(r/n)/(1 -(1 +r/n)^(-nt))
where A is the monthly payment, P is the principal amount of the loan, r is the annual interest rate, n is the number of times per year interest is compounded, and t is the number of years.
1340.00 = P(0.0525/12)/(1 -(1 +0.0525/12)^(-12·20)) ≈ 0.00673844·P
P ≈ 1340/0.00673844 ≈ $198,859.03
The family can afford a loan for $198,859.
