Answer:
a) $136,283.49
b) $360,000
c) $223,716.51
Step-by-step explanation:
a) The amortization formula tells the relationship between the monthly payment (A) and the principal (P).
A = P(r/12)/(1 -(1 +r/12)^(-12t)
Monthly payment on loan of P at annual rate r for t years.
P = $1000(12/0.08)(1 -(1 +0.08/12)^(-12·30)) ≈ $136,283.49
You can afford a loan of $136,283.49.
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b) The 360 payments of $1000 each will total $360,000.
You will pay the loan company $360,000.
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c) The interest is the difference between what you paid and what you received.
interest = $360,000 -136,283.49 = $223,716.51
Of the amount you repay, $223,716.51 is interest.
