Question

# Please show the below problem in Excel: John and Peggy would like to buy a house....

Please show the below problem in Excel:

John and Peggy would like to buy a house. They
have looked at their budget and determined that
they can afford a maximum monthly mortgage
payment of \$1,100. Interest rates on 30-year,
fixed-rate mortgages currently have a nominal
annual interest rate of 7 percent with monthly
compounding (payments due at the end of each
month). Given these loan terms, what is the
maximum amount John and Peggy borrow today
to purchase a house and not exceed a monthly
payment of \$1,100 on the loan? Round to the
nearest dollar.
Select one:
a. \$15,714
b. \$165,338
c. \$127,128
d. \$157,143

We can use the present value of the annuity to find the answer. Where,
PVA = Present value of the annuity
A = Annuity or monthly payment
i = Interest rate in decimal form (i.e 7% = 0.07)
n = Number of years
a = Number of payments in a year

Therefore,      Therefore, the correct answer is b. \$165,338

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