You have decided that you can make $1,000 a month payments on a 20 - year loan. Calculate and plot a graph of the amount you can borrow versus the interest rate you can get, for interest rates varying from 0% to 10%. Remember that on a graph, you can ’ t resolve too many signifi cant fi gures, so it ’ s all right to approximate the calculations.

Many of the calculators on the Web will let you solve this problem directly — entering what you know and getting what you want. My spreadsheet is set up to calculate the payment from the other variables. To solve this problem on my spreadsheet, you ’ ll have to enter the number of monthly payments and the rate, and then “ adjust ” the principal until the payment gets very close to $1,000. This problem illustrates the importance of getting as low an interest rate as you can to maximize your borrowing power for a fi xed payment amount.