A couple purchasing a home budget $18000 per month for their loan payment .is they has 20000$ avaliable for down payment and are considering a 25 years loan ,how much can they spend on the home if the loan is at 6.9% compounded monthly .
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Step-by-step explanation:
rate of interest per month(i)= 6.9%pa= 6.9/1200= 0.00575
monthly payment (p)=$1800
no.of period (n)= 12×25=300
now
perest value of loan= p[1-(1+ i)^-n]/i
=1800[1-(1.00575)^-300]/0.00575
= 1800×0.8209/0.00575
= $256991.33
total money spend on the home= $256991.33+$20000
=$276991.33
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