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

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