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4. You want to take out a fully-amortizing 30-year mortgage. You can afford monthly payments of $600 each. The interest rate is 9%. How much money can you borrow?

User Hugeen
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1 Answer

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Answer: $74569

Step-by-step explanation:

Based on the information given in the question, the amount that can be borrowed is explained below:

Present value of annuity will e calculated as:

= 600 × [1-(1+0.09/12)^-(12 ×30)] / (0.09/12)

= 600 × [1-(1+0.0075)^-(360)] / 0.0075

= 600 × 1-(1.0075)^-(360)] / 0.0075

= 600 × [1-0.0678860074] / 0.0075

= 600 × 124.282

= 74569

The amount that can be borrowed is $74569

User Vidy
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