Question

Your cousin can afford a monthly house payment of $675 if her bank is offering financing of 5.2% compounded monthly, on a 30 yr conventional loan, how much money can she afford to borrow for the purchase of a home

Your cousin can afford a monthly house payment of $675 if her bank is offering financing of 5.2% compounded monthly, on a 30 yr conventional loan, how much money can she afford to borrow for the purchase of a home?

Solutions

Expert Solution
payment = 675
i = .052/12 = .00433333
n = 12×30 = 360

present value = pay (1- (1+i)^-n)/i
= 675( 1 – 1.00433333^-360)/.00433333 = $122,926.00

answered by: Julie Charmster


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