Given the following information on a fixed-rate fully amortizing loan, determine the maximum amount that the lender will be willing to provide to the borrower: loan term: 30 years; monthly payment: $800; interest rate: 6%.

The maximum amount that the lender will be willing to provide to the borrower is $9,006.

Explanation:

Fixed payment for a specified period is know as the annuity. We will use the formula of present value of present value of annuity payment.

APV = C x [ (1 - (1 + i) ^-n) / i ]

C = Monthly payment = $800

Interest rate = i 8% = 0.08

n = number of years = 30 years

APV = $800 x [ (1 - (1 + 0.08) ^-30) / 0.08 ]

APV = $800 x 11.2578

APV = $9,006

So, The maximum amount that the lender will be willing to provide to the borrower is $9,006.