A homeowner planning a kitchen remodeling can afford a 400 m

A homeowner planning a kitchen remodeling can afford a $400 monthly payment. How much can the homeowner borrow for 4 years at 3%, compounded monthly, and still stay within the budget? (Round your answer to the nearest cent.)

Solution

Total money he can pay = 48*400= $19200

A=P(1+(R/100)^n

19200=P (1+3/12*100)^48 {3/12 is the acutal rate as interest is compounded monthly. and time is 48 months}

19200=P*1.12

P= 19200/1.12

=$ 17031.42