Question 1190658: You can afford a $1000 per month mortgage payment. You've found a 30 year loan at 8% interest.
a) How big of a loan can you afford? (Round down to the cent.)
b) How much total money will you pay the loan company?
c) How much of that money is interest?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the mortgage payment is 1000 per month.
the term of the lease is 30 years.
the interest rate is 8% per year.
if the interest rate is compounded monthly and the payment is made at the end of each month, then the present value will be 136,283.49.
the monthly interest rate is (8/12)%.
the number of months is 30 * 12 = 360.
the interest on the loan is 360 * 1000 minus the present value = 360,000 minus 136,283.49 = 223,716.51.
i used the ti-ba-ii business analyst calculator.
inputs were:
future value = 0
interest rate per month = (8/12)%.
number of months = 30 * 12 = 360.
payments of 1000 are made at the end of each month.
output was:
present value = 136,283.49.
the solution is rounded to the nearest penny.
let me know how you did.
if the answer is not correct, then the problem would most likely be in the assumptions.
those were the number of times the interest rate is compounded per year and whether or not the monthly payments are at the end of each momnth or at the beginning of each month.
theo
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