You can afford a $1250 per month mortgage payment. You've found a 30 year loan at 6% annual interest compounded monthly.

Question

a) How big of a loan can you afford?

b) How much total money will you pay the loan company?

c) How much of that money is interest?

Answer 1

Using the Same formula as the 3 previous questions,

PV= Max Loan amount = PMT*B(i,T) and PMT = 1200. Calculate B(i,T) = B(6%/12, 360)

=(12/.06)(1-(1/(1.005))³⁶⁰) I will let you complete the calculation