Answer:
a) To find out how big of a loan you can afford, we can use the formula for the monthly payment of a mortgage:
M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
where M is the monthly payment, P is the principal (the amount borrowed), i is the monthly interest rate (which is the annual interest rate divided by 12), and n is the number of monthly payments (which is the number of years times 12).
In this case, we know that M = $1,000, i = 0.053/12, and n = 30 x 12 = 360. We want to solve for P, the principal we can afford.
Substituting these values into the formula, we get:
$1,000 = P [ 0.004416(1 + 0.004416)^360 ] / [ (1 + 0.004416)^360 - 1 ]
Simplifying and solving for P, we get:
P = $183,928.72
Therefore, you can afford a loan of approximately $183,928.72.
b) The total money paid to the loan company will be the monthly payment multiplied by the number of payments over the life of the loan. In this case, we have:
Total money paid = $1,000 x 360 = $360,000
Therefore, the total amount of money paid to the loan company will be $360,000.
c) To find out how much of that money is interest, we can subtract the principal from the total amount paid. In this case, we have:
Interest paid = Total money paid - Principal = $360,000 - $183,928.72 = $176,071.28
Therefore, the amount of money paid in interest will be $176,071.28.