The monthly Mortgage payment in dollars, P, for a house is funciton of three var

Question

The monthly Mortgage payment in dollars, P, for a house is funciton of three variables: P = f(A,r, N), where A is the amount borrowed in dollars, r is the interest rate, and N is the number of years before the morgage is paid off. (a) f(92000, 14,30) = 72.82. What is the financial significance of the number 72.82. (b) f?r?($92000, 14, 30) = 72.82. What is the financial significance of the number 72.82? Would you expect f?A?(A,r, N) to be positive or negative? Why. (d) Would you expect FN?(A,r, N) to be positive or negative? Why?

Explanation / Answer

A) f(92000,14,30)=72.82. What does this tell you, in financial terms?

monthly mortgage payment is 72.82 dollars when amount borrowed =92000$, interest rate=14, and number of years before the mortgage is paid off=30

B) ?P/?r (92000,14,30) =72.82. What is the financial significance of the number 72.82?

monthly mortgage payment increases by 72.82dollars when interest rate increases by 1 unit with A,N constant

C) Would you expect ?P/?A to be positive or negative? Why?

?P/?A to be positive. with constant rate on interest r ,number of years N , montly repayment is increases when amount borrowed increases

D) Would you expect ?P/?N to be positive or negative? Why?

?P/?N to be negative. with constant rate on interest r ,amount borrowed A , less amount to be payed montly   when number of years for repayment increases.

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