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Given the following information on a fixed-rate fully amortizing loan, determine the maximum amount that the lender will be willing to provide to the borrower. Loan Term: 30 years, Monthly Payment: $800, Interest Rate: 6%.

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hyderali230

Answer:

Maximum amount of Loan is $133,433

Explanation:

Time of interest = 30 * 12  = 360 times

Interest rate = 6% / 12  = 0.5% per month

Use following formula to calculate the loan value

A = P [ r ( 1 + r )^n ] / [ ( 1 + r )^n - 1

$800 = P [ 0.005 ( 1 + 0.005 )^360 ] / [ ( 1 + 0.005 )^360 - 1 ]

$800 = P [ 0.005 ( 1.005 )^360 ] / [ ( 1.005 )^360 - 1 ]

$800 = P x 0.006

P = $800 / 0.006

P = 133,433

Answer:

Maximum amount of Loan is $133,433

Explanation:

Time of interest = 30 * 12  = 360 times

Interest rate = 6% / 12  = 0.5% per month

Use following formula to calculate the loan value

A = P [ r ( 1 + r )^n ] / [ ( 1 + r )^n - 1

$800 = P [ 0.005 ( 1 + 0.005 )^360 ] / [ ( 1 + 0.005 )^360 - 1 ]

$800 = P [ 0.005 ( 1.005 )^360 ] / [ ( 1.005 )^360 - 1 ]

$800 = P x 0.006

P = $800 / 0.006

P = 133,433

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