You find that the going rate for a home mortgage with a term of 30 years is 5% APR. The lending agency says that based on your income, your monthly payment can be at most $750 . How much can you borrow?
Using A=monthly payment P=amount borrowed (present value) i=5%/12 per month (period) n=30*12 months (months)
Then [tex]P=\frac{A*((1+i)^n-1)}{i*(1+i)^n}[/tex] Substitute values [tex]P=\frac{750*((1+.05/12)^{360}-1)}{.05/12*(1+.05/12)^{360}}[/tex] [tex]=\frac{750*((1+.05/12)^{360}-1)}{.05/12*(1+.05/12)^{360}}[/tex] [tex]=139711.21[/tex] to the nearest cent
