1. Amortization of debt. If a loan of A dollars is amortized over n years at an annual interest rate r (expressed as a decimal) compounded monthly, the monthly payments are given by M= Ai / 1-(1+i)^-12n where i = r / 12 is the monthly rate.

Mortage Payments. Suppose a family figures it ca handle monthly mortage payments of no more than $1, 200.

a. What is the largest amount of money they can borrow, assuming the blender is willing to amortize over 30 years at 8% annual interest compounded monthly?

b. Check your answer

2. Mortage Payments. A home loan is made for $150,000 at 9% annual interest, compounded monthly, for 30 years.

a. What is the monthly mortgage payment on this loan?

b. What is the tatal amount paid?

c. Give the total interest paid.