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You are excited to buy your first house. Based on your credit history, the bank is...

You are excited to buy your first house. Based on your credit history, the bank is willing to lend you money at 4 percent interest compounded monthly. You can afford monthly payments of $1400. How much can you afford to borrow? Assume the mortgage is for 18 years.

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Answer #1

Number of months : 18* 12 = 216

monthly rate : 4/12 = .33333%

Amount willing to pay = PVA .33333%,216 * Monthly payment

                = 153.879986 * 1400

               = $ 215319.81   [rounded to 215320]

**present value annuity factor can be find usinf financial calculator .i= .33333%,n=216 ,PMT =1400

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