You are ready to buy a house. Total price is $160,105. For the remaining part, you plan to borrow the loan from the bank. The interest rate on the loan is 6% per year with monthly compounding (.5% per month) for a 30-year fixed rate loan. You are also required to pay $20000 initially for down payment. If you have an annual salary of $36,000, and you expect to use 30% of your monthly income to cover the house loan. Should you buy this house?

You are ready to buy a house. Total price is $160,105. For the remaining part, you plan to borrow the loan from the bank. The interest rate on the loan is 6% per year with monthly compounding (.5% per month) for a 30-year fixed rate loan. You are also required to pay $20000 initially for down payment. If you have an annual salary of $36,000, and you expect to use 30% of your monthly income to cover the house loan. Should you buy this house?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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