Question

given the following information, determine the maximum loan amount of the canadian mortgage: maximum GDS ratio...

given the following information, determine the maximum loan amount of the canadian mortgage: maximum GDS ratio is 32%, annual gross family income $78,000 estimated monthly real estate taxes $200, anticipated interest rate on the mortgage loan: $7.5%: mortgage maturity: 25 years, non mortgage debt payment: $600.

A. $256,986.86

B. $174,969.78

C. $254,400.87

D.$173,209.10

Homework Answers

Answer #1

Monthly GDS = 78000/12 * 32% = 2080

Mortgage payment allowed = 2080 - 200 - 600 = 1280

Maximum loan is:

a Present value of annuity= P* [ [1- (1+r)-n ]/r ]
P= Periodic payment                       1,280.00
r= Rate of interest per period
Annual interest 7.50%
Number of payments per year 12
Interest rate per period 0.075/12=
Interest rate per period 0.625%
n= number of periods:
Number of years 25
Periods per year 12
number of payments 300
Present value of annuity= 1280* [ (1- (1+0.00625)^-300)/0.00625 ]
Present value of annuity= 173,209.10

Answer is 173,209.10

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