Question

14. You can afford a $1,100 per month mortgage payment. You've found a 30-year loan at 3.45% interest.(a) How big of a loan can you afford? $(b) How much total money will you pay the bank? $(c) How much of that money is interest? $

Answer 1

SOLUTION:

One can afford $1,100 per month mortgage payment and one has found a 30-year loan at 3.45% interest.

$1100\text{ x 12 x 30 = \ 396,000 }$

(a)

$\begin{gathered} \frac{P\text{ x 3.45 x 30}}{100}\text{ + p = 396,000} \\ P(1.035)\text{ + p = 396,000} \\ p\text{ (1.035 + 1) = 396000} \\ P(2.035)\text{ = 396000} \\ P\text{ = \ }\frac{396000}{2.035} \\ P\text{ = \ 194594.6} \end{gathered}$

(b) The total money he would be paying

$\text{ \ 396,000}$

(c) $The amount of the money that is interest i;

$\text{\ 396,000 - \ 194594.6 = \ 201405.4}$