How much loan can a household afford if their gross annual income is RM80,000 with current...
How much loan can a household afford if their gross annual income is RM80,000 with current mortgage rates at 6% p.a. compounded monthly over 20 years, monthly payments. (Hint: Use 25% of household income as the limit for payments.)
Homework Answers
Max monthly payment = gross income/months in a year*limit of payment
=80000/12*0.25=1666.67
| PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments |
| PV= 1666.67*((1-(1+ 6/1200)^(-20*12))/(6/1200)) |
| PV = 232635.08 = Max loan amount |
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