document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1181795>Question 1181795</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You can afford a $1200 per month mortgage payment. You've found a 30 year loan at 7% Interest. 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? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #811725 by </B><A HREF=/tutors/aboutme.mpl?userid=math_tutor2020><B>math_tutor2020(3817)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=math_tutor2020><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=811725\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <font color=black size=3><BR>\n" );
document.write( "Part A\r<BR>\n" );
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document.write( "We'll use this formula<BR>\n" );
document.write( "P = (L*i)/( 1-(1+i)^(-n) ) \r<BR>\n" );
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document.write( "where<BR>\n" );
document.write( "P = monthly payment<BR>\n" );
document.write( "L = loan amount<BR>\n" );
document.write( "i = r/12, r is the interest rate<BR>\n" );
document.write( "n = number of months\r<BR>\n" );
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document.write( "In this case, <BR>\n" );
document.write( "P = 1200<BR>\n" );
document.write( "L = unknown<BR>\n" );
document.write( "i = r/12 = 0.07/12 = 0.00583333333333 (approx)<BR>\n" );
document.write( "n = 12y = 12*30 = 360 months\r<BR>\n" );
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document.write( "We'll plug those known values in to find the unknown value L<BR>\n" );
document.write( "P = (L*i)/( 1-(1+i)^(-n) ) <BR>\n" );
document.write( "1200 = (L*0.00583333333333)/( 1-(1+0.00583333333333)^(-360) ) <BR>\n" );
document.write( "1200 = (0.00583333333333L)/0.87679414636214<BR>\n" );
document.write( "1200*0.87679414636214 = 0.00583333333333L<BR>\n" );
document.write( "1052.15297563457 = 0.00583333333333L<BR>\n" );
document.write( "0.00583333333333L = 1052.15297563457<BR>\n" );
document.write( "L = 1052.15297563457/0.00583333333333<BR>\n" );
document.write( "L = 180369.081537458<BR>\n" );
document.write( "L = 180369.08\r<BR>\n" );
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document.write( "Answer: <font color=red>$180,369.08</font><BR>\n" );
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document.write( "Part B\r<BR>\n" );
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document.write( "If you pay $1200 per month for 360 months (aka 30 years), then you'll pay back a total of 1200*360 = 432,000 dollars.<BR>\n" );
document.write( "This includes principal (the result of part A) and interest on top of it. \r<BR>\n" );
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document.write( "Answer: <font color=red>$432,000</font>\r<BR>\n" );
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document.write( "Part C\r<BR>\n" );
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document.write( "Subtract the results of B and A to get<BR>\n" );
document.write( "B-A = (total paid back) - (principal)<BR>\n" );
document.write( "B-A = (432,000) - (180,369.08)<BR>\n" );
document.write( "B-A = 251,630.92\r<BR>\n" );
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document.write( "Answer: <font color=red>$251,630.92</font><BR>\n" );
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document.write( " </SPAN>\n" );
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