Answer:
a) $115,840.97
b) $306,000
c) $190,159.03
Explanation:
Loan payment calculations can be done using the amortization formula:
A = P(r/12)/(1 -(1 +r/12)^(-12t))
where A is the monthly payment, P is the principal value of the loan, r is the annual interest rate, and t is the loan duration in years.
a) Loan amount
The principal amount of the loan can be found by filling in the given values and solving for P.
850 = P(0.08/12)/(1 -(1 +0.08/12)^(-12·30))
P = 850(1 -1.0066667^-360)/0.0066667 ≈ 850×136.283494
P = 115,840.97
You could afford a loan of $115,840.97.
b) Total paid
The total amount paid is the sum of 360 payments of $850 each:
360 × $850 = $306,000
You will pay $306,000 to the loan company.
c) Interest
The amount of interest is the difference between the amount paid and the amount borrowed:
$306,000 -115,840.97 = $190,159.03
$190,159.03 of the amount paid is interest.
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Additional comment
A variety of apps, calculators, and spreadsheets can do these calculations for you. The result from one of these calculators is attached. The PV is the Present Value of the series of 360 payments of $850 each. It is the loan amount.