Question

Max can afford a $900 monthly payment. if the current mortgage rates are 5% and he wishes to have a 30-year mortgage, what is the maximum amount he can afford to borrow

A. $150,000
B. $167,653
C. $176,280
D. $176,000

Answer 1

Answer: 167653

Explanation:

Answer 2

The formula of the present value of an annuity ordinary is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
Pv present value?
PMT monthly payment 900
R interest rate 0.05
K compounded monthly 12 because the payments are monthly
N time 30 years

Pv=900×((1−(1+0.05÷12)^(−12×30))÷(0.05÷12))
pv=167,653....answer

Hope it helps!