You are looking for a house to buy. Here are your three options:

House #1	House #2	House #3
Price = $190,000	Price = $220,000	Price = $250,000

You would be taking a home loan from a bank to cover the purchase price of a house that you would be able to afford. Every month you can afford to spend $1,500 on loan payments. Your local bank has approved you for a 20-year loan, at 6% annual interest rate, requiring monthly loan payments.

Given the information above, which of the three houses can you afford to buy?

SOLUTIONS:

You would approach this problem by first figuring out the maximum loan amount that you can afford to take from your local bank. You can do this math in one calculation

For the loan amount, you would be solving for

More specifically, it's the type of annuity called. In your calculations of the loan amount, you will use: for the number of time periods, and amount for the payment.

Your calculated loan amount is For your calculations, increase decimal places for any intermediate calculations, from the default 2 to 6 or higher, and only round your final answer to whole number.

This will allow you to buy