00:01
Hi, thank you for your question.
00:01
Assume you can afford a loan of x dollars.
00:25
So we know that the interest rate is 4%, so which means x times 1 plus 4%.
00:37
To the end's power, here equals 5, because this is a 5 year loan.
00:51
Okay, so we assume that this is not compound interest.
01:05
So we have x times 1 plus 4%.
01:08
This is one year, okay? 5 years is going to be x plus x times 4 % times 5.
01:22
So each year the interest rate is 4 % times x.
01:26
5 years is 4 % times x times 5 plus the principle which is x.
01:34
So this is equal to 1 .2 times x.
01:43
So 1 .2 times x and we know the you can afford the month a monthly payment of $450...
