Question

You can afford a $1050 per month mortgage payment. You've found a 30 year loan at 7% interest.

a) How big of a loan can you afford? Round your answer to the nearest dollar.
S
b) How much total money will you pay the loan company? Round your answer to the
nearest dollar.
C) How much of that money is interest? Round your answer to the nearest dollar.
S
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Answer 1

9514 1404 393

Answer:

• loan: $157,823
• repaid: $378,000
• interest: $220,177

Explanation:

For a loan value of 1, the monthly payment on a 30 year loan at 7% is ...

A = (0.07/12)/(1 -(1 +0.07/12)^(-12·30)) ≈ 0.00665302495

Then the amount repaid after 360 payments is ...

360A = 2.39508898 . . . times the principal amount

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a) For a monthly payment of $1050, the principal can be ...

$1050/0.00665302495 ≈ $157,823

__

b) The amount repaid to the loan company is ...

$157,823×2.39508898 ≈ $378,000

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c) The amount that is interest is ...

$378,000 -157,823 = $220,177