Step-by-step explanation:
Given
Principal = $1,800
interest rate = 5.5%
Using the below formula to calculate the mortgage
[tex]\begin{gathered} m\text{ = }\frac{p\cdot\text{ r (}1+r)^n}{(1+r)^n\text{ - 1}} \\ \text{Where P = principal, r = interest rate} \\ m\text{ = \$1800} \\ r\text{ = 5.5\% } \\ r\text{ = }\frac{5.5}{100}\text{ = 0.055} \\ \text{ since it is per month, hence the interest rate is given as} \\ r\text{ = }\frac{0.055}{12}\text{ = 0.00458} \\ n\text{ = 12 }\cdot\text{ 30} \\ n\text{ = 360} \\ 1800\text{ = }\frac{P\cdot0.00458(1+0.00458)^{360}}{(1+0.00458)^{360}\text{ - 1}} \\ 1800\text{ = }\frac{P\cdot0.00458(1.00458)^{360}}{(1.00458)^{360}\text{ - 1}} \\ 1800\text{ = }\frac{P\cdot0.00458\cdot\text{ 5.1812}}{5.1812\text{ - 1}} \\ 1800\text{ = }\frac{P\cdot\text{ 0.0237}}{4.1812} \\ \text{Cross multiply} \\ 1800\cdot\text{ 4.1812 = P }\cdot\text{ 0.0237} \\ 7526.16\text{ = P }\cdot\text{ 0.0237} \\ p\text{ = }\frac{7526.16}{0.0237} \\ P=\text{ \$317, 559. 50} \end{gathered}[/tex]Hence, the loan he can afford is $317, 559. 50
Part B
The total money he will pay to the bank is calculated as follows
Total amount = 1800 * 360
Total amount = $648, 000
