Fred wants to take out a loan. He can afford to make monthly payments of 200 dollars and wants to pay the loan off after exactly 30 years. What is the maximum amount that Fred can afford to borrow if the bank charges interest at an annual rate of 10 percent, compounded monthly? (Give your answer, in dollars, correct to the nearest dollar.) Need a hint on how to approach this question? amount he can borrow:
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The annual interest rate is 10 percent, so the monthly interest rate is 10 percent divided by 12 months, which is 0.10/12 = 0.00833. Show more…
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James wants to take out a loan. He can afford to make monthly payments of $100 and wants to pay the loan off after exactly 20 years. What is the maximum amount that James can afford to borrow if the bank charges interest at an annual rate of 8 percent, compounded monthly? (Give your answer, in dollars, correct to the nearest dollar.)
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