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Your best friend's parents want to buy a home in the Worcester County, but they don’t know the exact amount of money that they can afford to borrow. They can afford monthly payments of $ 1,800. A friendly bank in Worcester has indicated that they can borrow money at 6% fixed rate for 30 years with monthly payments. They can afford to borrow:

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agustinsr99

Answer: They can afford to borrow: $300225.

Explanation: We must use the annuity formula in which the monthly interest rate is 0.06 / 12 = 0.005, the payment is 1800, and the n is equal to (12x30 = 360) which are the number of months in 30 years.

1800 × [tex]\frac{(1+0,005)^{360}-1 }{(1+0,005)^{360} . 0,005 }[/tex] = $300225.

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