You are interested in purchasing a home. you can afford $1200 a month as a mortgage payment. how much can you pay for a home assuming a 30 year (360 months) loan at 4.25% interest? (please reference the loan information in the "task 2 data" cells as the arguments for your function.)

$243932.24 The formula for the payments you need to make on a loan is P = (R/(1-(1+R)^(-N)))L where P = Payment R = Interest per payment period N = Number of periods L = Loan amount. Let's calculate the (R/(1-(1+R)^(-N))) portion of the formula where R = 0.0425/12 = 0.003541667 N = 12*30 = 360 So (0.003541667/(1-(1+0.003541667)^(-360))) = 0.004919399 So now the simplified formula is P = 0.004919399 * L Now substitute the desired value for P and solve for L P = 0.004919399 * L 1200 = 0.004919399 * L 243932.2409 = L So the maximum loan you can afford is $243932.24 But it would be recommended that you get a loan for a lower amount since this calculation does not take into consideration any expenses for insurance or taxes.