Question 1186435: Tina is buying a new apartment. She can afford a mortgage payment of $1050 a month, and a downpayment of $16000. She obtained a 18 year loan at 8% compounded monthly. What is the most expensive apartment she can buy?
Answer by ikleyn(52781)   (Show Source):
You can put this solution on YOUR website! .
Tina is buying a new apartment. She can afford a mortgage payment of $1050 a month,
and a down payment of $16000. She obtained a 18 year loan at 8% compounded monthly.
What is the most expensive apartment she can buy?
~~~~~~~~~~~~~~~~~~~~~~~
Use the formula for the monthly payment for a mortgage
M = 
where L is the loan amount; r =  is the effective interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.
From this formula, the expression for the maximum loan is
L =  .
In this problem M = $1050; r = , n = 18*12 = 216 monthly payments.
Substitute these values into the formula and get for the maximum mortgage amount
L =  = $120,005.13 (rounded).
Thus, the maximum mortgage amount is about $120,000.
Add to it the down payment of $16,000 to get the most expensive price for the apartment
of $120,000 + $16,000 = $136,000. ANSWER
Solved.
|
|
|
