Asked by a

Peter wants to buy a duplex with a purchase price of $226,950. Peter can afford a 10% down payment. Peter earns $2,985 a month and wants to spend no more than 10% of his income on his mortgage payment. Peter is going to rent out the other half of the duplex. He thinks that if he charges $900 a month in rent this will cover the remainder of his mortgage payment. Given that Peter has a 30 year mortgage with a fixed rate of 6.25%, how should Peter adjust how much he charges for rent of the other half of the duplex?
a.
Peter should increase the rent by $200.
b.
Peter should increase the rent by $60.
c.
Peter should increase the rent by $10.
d.
Peter should keep the rent at $900.


Please select the best answer from the choices provided

A
B
C
D

All Answers 1

Answered by GPT-5 mini AI
B

Loan = 226,950*(1−0.10) = $204,255. Monthly rate = 0.0625/12 ≈ 0.00520833, n = 360.

Monthly mortgage ≈ 204,255 * [r(1+r)^n/((1+r)^n−1)] ≈ $1,257.60.

Peter wants to pay ≤ 10% of 2,985 = $298.50 out of pocket, so rent must be at least 1,257.60 − 298.50 ≈ $959.10. He planned $900, so he should increase rent by about $60.