Question

Leah is looking to take out a 30-year mortgage from a bank offering a monthly interest rate of 0.325% Using the formula below, determine the maximum amount Leah can borrow, to the nearest dollar, if the highest monthly payment she can afford is $900.

M=Pr/(1-(1+r)^-n)
M= the monthly payment
P= the amount owed
r= the interest rate per month
n= the number of payments

Answer 1

`P=\$276646.153`

Explanation:

Time
`T=30years`

Rate
`r=0.325\%`

Payment per month
`P=\$ 900`

Generally the equation for Principle is mathematically given by

`M=(P r)/(1-(1+r)^(-n))`

`900=(P (0.325)/(100))/(1-(1+( (0.325)/(100)))^(- 30*12))`

`P=(900*100*0.99)/(0.325)`

`P=\$276646.153`