Answer at bottom looking for the work Thank You Answer at bottom looking for the

Question

Answer at bottom looking for the work Thank You Answer at bottom looking for the work Thank You can affad to spend no mee t anssono then mortgage payments. Suppose thatthe interest tate that a rest s compounded contasosty and that pays maant also made s (a) Determine t the maximan asmount that thas buyea can afford to borrow on a 20-year mortgage, on a 30-year mortgage ANSWER e $209,641 74 (20 years), $250.410 33 (30 yean) b) Determite the total interest paid during the tem of the montgage in each of the cases in part () $1503526(20 years),$289.589 61(30 years)

Explanation / Answer

a)

Present value of annuity at 20 years

= [C/(e^r-1)] * (1-e^-rn)

= [1500/(e^6%/12 -1)] * (1-e^-6%/12*240)

= 209641.74

Present value of annuity at 30 years

= [1500/(e^6%/12 -1)] * (1-e^-6%/12*360)

= 250410.33

b)

total interest paid = 1500 * 12* 20 - 209641.74 = 150358.26

total interest paid = 1500 * 12* 30 - 250410.33 = 289589.67

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