A homeowner planning a kitchen remodeling can afford a $300 monthly payment. How much can the...
A homeowner planning a kitchen remodeling can afford a $300 monthly payment. How much can the homeowner borrow for 2 years at 9%, compounded monthly, and still stay within the budget?
Homework Answers
This requires application of PV of annuity formula,
PV =
n = 2 * 12 months = 24 months, r = 9%/12 = 0.75% (per month)
![PV = 300 * [\frac{1-(1+0.0075)^{-24}}{0.0075}]](http://img.homeworklib.com/questions/fc29c020-7329-11ea-bb18-53da72d258f5.png?x-oss-process=image/resize,w_560)
PV = 300 * 21.8892
PV = $6,566.74
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