Final answer:
To calculate the maximum loan Joanna can afford, we can use the present value formula: Loan amount = Annual payment / (1 + interest rate)^(number of years). Given that Joanna can afford to pay $12,000 a year for 30 years and the interest rate is 4.2% annually, the maximum loan Joanna can afford is approximately $190,876.38. She will end up paying a total of $360,000 over the course of 30 years.
Step-by-step explanation:
To calculate the maximum loan Joanna can afford, we can use the present value formula:
Loan amount = Annual payment / (1 + interest rate)^(number of years)}
Given that Joanna can afford to pay $12,000 a year for 30 years and the interest rate is 4.2% annually, we can substitute these values into the formula:
Loan amount = $12,000 / (1 + 0.042)^30
Calculating this, we find that the maximum loan Joanna can afford is approximately $190,876.38.
To find out what she ends up paying after 30 years, we can multiply the annual payment by the number of years:
Total payment = Annual payment * number of years = $12,000 * 30 = $360,000
So Joanna will end up paying a total of $360,000 over the course of 30 years.