Question

You can afford a $1200 per month mortgage payment. You've found a 30 year loan at 6% annual interest compounded monthly.

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?

$

Answer 1

a)	Loan amount	= pv(rate,nper,pmt,fv)
		= $ 200,149.94
	Where,
	rate	=	6%/12	=	0.005
	nper	=	30*12	=	360
	pmt			=	$ -1,200
	fv			=	0
b)	Total repayment	=	Monthly Payment	*	Number of months
		=	$             1,200	*	360
		=	$       432,000
c)	Interest	=	Total repayment	-	Total Loan amount
		=	$       432,000	-	$ 200,149.94
		=	$ 231,850.06