Marc can afford a $750 monthly mortgage payment. If the current mortgage rates are 5% and he wishes to have a 30-year mortgage,
2 answers:
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Assuming convergence of the sequence, we have for some limit
as
. This also means
. So in the above equation, we can substitute and solve for
:
The limit can only be one of these values; otherwise, the sequence would be divergent. To decide which one is correct, we can observe that the sequence is strictly positive. So .