Question

A homeowner planning a kitchen remodeling can afford a $800 monthly payment. How much can the homeowner borrow for 4 years at 3%, compounded monthly, and still stay within the budget? (Round your answer to the nearest cent.)

Answer 1

Information provided:

Monthly payment= $800

Time= 4 years*12= 48 months

Interest rate= 3%/12= 0.25

Enter the below in a financial calculator to compute the present value:

PMT= 800

N= 48

I/Y= 0.25

Press the CPT key and PV to compute the present value.

The value obtained is 36,142.96.

Therefore, the homeowner can borrow $36,142.96.

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