You can afford a $950 per month mortgage payment. You've found a 30 year loan at...

You can afford a $950 per month mortgage payment. You've found a 30 year loan at 6% interest. a) How big of a loan can you afford? $ b) How much total money will you pay the loan company? $ c) How much of that money is interest? $

Expert Solution

a)
	Present Value Of An Annuity
	= C*[1-(1+i)^-n]/i]

	Where,
	C= Cash Flow per period
	i = interest rate per period =6%/12 =0.5%
	n=number of period =300*12 =360

	= $950[ 1-(1+0.005)^-360 /0.005]

	= $950[ 1-(1.005)^-360 /0.005]

	= $950[ (0.834) ] /0.005

	= $1,58,452.03

	Loan can be afford = $158452.03


b)	Money will pay = $9503012

	=$342000

C)	Interest amunt = $342000-158452.03
	=$342000-158452.03
	=$183547.97

jeff jeffy answered 3 years ago

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