Question

You can afford a $1050 per month mortgage payment. You've found a 30 year loan at 8% interest.

Answer 1

Answer:

loan can you afford = $143097.67

total money will you pay the loan company = $378000

interest amount  = $234902.33

Explanation:

given data

principal = $1050 per month

time = 30 year = 30 × 12 = 360 months

interest rate = 8%  = $\frac{0.08}{12}$ = 0.006667 monthly

solution

we get here first maximum amount of loan by present value of annuity as

present value of annuity = principal × $\frac{1-(1+rate)^{-t}}{rate}$  .........1

put here value we get

present value of annuity = 1050 × $\frac{1-(1+0.006667)^{-360}}{0.006667}$

present value of annuity = $143097.67

and

now we get total amount of money pay will be as

total amount of money pay = principal × time period

total amount of money pay = $1050 × 360

total amount of money pay = $378000

and

total amount of interest paid will be

interest amount = total amount paid - loan amount

interest amount  = $378000 - $143097.67

interest amount  = $234902.33