The Johnsons have accumulated a nest egg of $28,000 that they intend to use as a

Question

The Johnsons have accumulated a nest egg of $28,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1200/month In monthly payments (to take advantage of the tax deductlon) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1500 f local mortgage rates are 9 % year compounded month y or a conventional -yr mortgage what ls e price range of house they should consider, ound your answers to e nearest cent.) least expensive $(No Response most expensive $No Re Talk to a Tutor +-0.05 Points TanApMalh5 42030 My Note Lauren plans to deposit s6o0o into a bank account at the beginning of next month and $200/month into the same account at the end of that month and at the end of cach subsecquent month for the next o yr. if her bank pays interest ata rate 7% year compounded monthly how much ill Lauren have in her account at the en of 6 r? Assume she makes no withdrawa s durin t o r r per Round your ans to en aros cent

Explanation / Answer

1

Time=30 years=30*12=360 months

Rate=9.5%12

Minimum montlhy mortgage payment=1200

Minimum loan=142712.02=PV(9.5%/12,12*30,-1200)

hence, minimum price of house=142712.02+28000=170712.02

Maximum montlhy mortgage payment=1500

Maximum loan=178390.02=PV(9.5%/12,12*30,-1500)

hence, maximum price of house=178390.02+28000=206390.02

2

26952.82=FV(7%/12,6*12,200,6000)

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