Question

You find that the going rate for a home mortgage with a term of 30 years is 5% APR. The lending agency says that based on your income, your monthly payment can be at most $750 . How much can you borrow?

Answer 1

Using
A=monthly payment
P=amount borrowed (present value)
i=5%/12 per month (period)
n=30*12 months (months)

Then

`P=(A*((1+i)^n-1))/(i*(1+i)^n)`
Substitute values

`P=(750*((1+.05/12)^(360)-1))/(.05/12*(1+.05/12)^(360))`

`=(750*((1+.05/12)^(360)-1))/(.05/12*(1+.05/12)^(360))`

`=139711.21` to the nearest cent