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You are considering the purchase of a really nice home in three years. You have $100,000...

You are considering the purchase of a really nice home in three years. You have $100,000 in your bank savings account today but would rather wait to buy the house. You plan to leave the money there for three years under 4% APR with monthly compounding.

You understand that this money alone will not be enough to buy the house of your dreams, so when it’s time to buy the house you will have to take out a mortgage loan. Based on your credit score, you can obtain a loan at 7% APR for 30 years. You calculate that you will be able to afford monthly mortgage payments of $1,500.00.

  1. What is the amount of mortgage loan that you will be able to afford given a 30-year term, $1,500.00 monthly payments, and 7% APR?

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Expert Solution

SEE THE SCREENSHOT. ANY DOUBTS, HAPPY TO HELP YOU. THANK YOU. THUMBS UP PLEASE.

jeff jeffy answered 1 year ago
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