Question

A potential homebuyer has an annual income of $40,000.00. Assuming an affordable monthly mortgage payment of $850.00, what is the affordable mortgage amount at an interest rate of percent for 15 years?
a) $127,820
b) $94,655
c) $91,314
d) $81,626
Ms. Sue
What percent interest is this homebuyer paying?
Sorry I left that out - 7 percent.
Ms. Sue
This site lets you figure the amount of payments based on the amount of the loan, interest rate, and time.

http://www.bankrate.com/brm/mortgage-calculator.asp?unroundedPayment=853.8868573098035&loanAmount=95000.00&nrOfYears=15&nrOfMonths=180&interestRate=7.00&startMonth=4&startDay=5&startYear=2008&monthlyPayment=853.89&monthlyAdditional=0&yearlyAdditional=0&yearlyAdditionalMonth=4&oneAdditional=0&oneAdditionalMonth=4&oneAdditionalYear=2008&paidOffDate=May+5%2C+2023&submit.x=39&submit.y=7
monthly rate = .07/12
= .0058333

present value = 850(1 - 1.0058333^-180)/.0058333
= 94568

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