You are ready to purchase a condominium. ("Being ready" means you are able to make the down payment and closing costs with your own funds.) The down payment is $15,000. Closing costs are quoted to be 5% of the loan value. Your annual salary is $42,000 and the bank can only grant a loan with monthly loan payment not exceeding 30% of your monthly income. The APR on a 30 year mortgage is 6%. (a) What is the maximum monthly payment? (b) What is the present value of bank loan? (c) How much can you offer for the condominium? (PV of bank loan - closing costs + down payment)
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