Homework Help: math

Posted by amy on Monday, February 7, 2011 at 10:44pm.

The Johnsons have accumulated a nest egg of $19,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1300/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1600. If local mortgage rates are 8.5%/year compounded monthly for a conventional 30-yr mortgage, what is the price range of houses they should consider?

math - tchrwill, Tuesday, February 8, 2011 at 11:06am
R = the periodic payment
P = the amount borrowed
n = the number of payments and i = the periodic interest in decimal form.

The monthly payment, R, required to retire the debt of $P over a period of n = 30(12) = 360 months at the monthly interest rate of i = 8.5/(100(12)) = .0070833 derives from

R = Pi/[1-(1+i)^(-n)]

Solve for P.

Answer this Question

Related Questions

Math - Johnsons accumulated a nest egg of $40,000 to use as down payment toward...
Math - Johnsons accumulated a nest egg of $40,000 to use as down payment toward...
Math - The price of a new car is 20,000. Assume that an individual makes a down ...
finance mortgage payment - Purchase a home for $160,000. I intend to put down 20...
Math - The Robinsons decide they would rather purchase the $85,000 home. Their ...
SMU - You have just purchased a new warehouse. To finance the purchase, you'...
Finance - You have just purchased a new warehouse. To finance the purchase, you...
finite math - The price of a new car is $16,000. Assume that an individual makes...
algebra - If Joseph decided that he wanted to have $300,000 accumulated in 30 ...
math - what is the dollar value of ending inventory if there were 17,000 units ...

For Further Reading

First Name:
School Subject:
Answer: