Question

1. A homeowner planning a kitchen remodeling can afford a $800 monthly payment. How much can the homeowner borrow for 3 years at 6%, compounded monthly, and still stay within the budget? (Round your answer to the nearest cent.)

2. The problem describes a debt to be amortized. (Round your answers to the nearest cent.)
A man buys a house for $380,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 5years. The interest rate on the debt is 9%, compounded semiannually.

(a) Find the size of each payment.
$  

(b) Find the total amount paid for the purchase.
$  

(c) Find the total interest paid over the life of the loan.
$

Answer 1

we will find the principle amount that can be borrowed by following formula:

WHERE,

P= ??

EMI = $800

R= 0.06/12 TIMES A YEAR = 0.005

N= 3 YEARS*12=36 months

800 =P *0.005 * 1.196680524 / 1.1907268904

=$15,920.40

homeowner can borrow $15,920.40

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