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Problem 2.7 A Given: You wish to buy a building with monthly payments of S1500 and a $20,000 downpayment. The bank offers a 30-year loan at 5.75% interest compounded monthly. Find: The maximum building price that you can afford. interest
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Answer #1

Time in months (n)= 30 yrs * 12 = 360 months

Rate(r)= 5.75/12 = 0.479%

Monthly payment (P) = $1500

Downpayment= $20000

Max loan amount = P[1-(1+r)-n/r]

=1500[1-(1+5.75)-360/5.75]

=1500[1-(6.75)-360/5.75]

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