You are considering the purchase of a condominium to use as

You are considering the purchase of a condominium to use as a rental property. You estimate that you can rent the condominium for $1, 200 per month and that taxes, insurance, and maintenance costs will run about $200 per month. If interest rates are 9% compounded monthly, how large a 20-year mortgage can you assume and still have the rental income cover the monthly expenses? The mortgage is. (Round to the nearest cent as needed.)

Solution

If P is the mortgage , then the largest P (given the expenses 200 and the rent 1200 , and still making profit) is

P(1+9/1200)²⁴⁰ =(1200-200)

Works out to be P= $39939