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1 May, 06:33

Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage (where the mortgage factor is 5.37), how much of a mortgage loan can he afford? a. $324,000.00

b. $150,000

c. $167,597.77

d. $200,100.75

e. $510,015.00

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Answers (1)
  1. 1 May, 06:38
    0
    option (c) $167,597.77

    Explanation:

    Data provided in the question:

    Monthly mortgage payment = $900

    Duration of loan, n = 30 years = 360 months

    Interest rate = 5%

    Monthly rate of interest = 5% : 12 = 0.4167% = 0.004167

    Now,

    Mortgage loan can he afford

    = Monthly mortgage payment * [ (1 - ((1 + r) ⁿ) ⁻¹) : r ]

    = $900 * [ (1 - ((1 + 0.004167) ³⁶⁰) ⁻¹) : 0.05 ]

    = $167,597.77

    Hence,

    The answer is option (c) $167,597.77
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