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

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

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