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Math Help - Help with a difference equation problem!

  1. #1
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    Help with a difference equation problem!

    Wanda wants to take out a loan. She can afford to make monthly payments of 200 dollars and wants to pay the loan off after exactly 30 years.
    What is the maximum amount that Wanda can afford to borrow if the bank charges interest at an annual rate of 5 percent, compounded monthly?
    (Give your answer, in dollars, correct to the nearest dollar.)


    Help please!
    Thank you!
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  2. #2
    Super Member malaygoel's Avatar
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    P=\frac{Li}{1-e^{-nln(1+i)}}

    where
    P=monthly payment...=200
    L=amount borrowed...=to be found
    i=monthly rate...=5/12
    n=term in months..=30*12=360

    now, can you continue?
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  3. #3
    Master Of Puppets
    pickslides's Avatar
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    \frac{A}{30\times 12}=200

    \frac{A}{360}=200

    A= 72000

    now using A=P\left(1+\frac{r}{100n}\right)^{nt}

    72000=P\times\left(1+\frac{5}{100\times 12}\right)^{12\times 30}

    P = \frac{72000}{\left(1+\frac{5}{100\times 12}\right)^{12\times 30}}
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