# Math Help - Word Problem - Puzzle

HEN is the letters..

Select the first three letters of your last name. Each letter has a numerical place value in the alphabet. For example, D is 4, L is 12, and Z is 26. Add the three place values together. For example, Wallace would yield WAL, which is 23+1+12 = 36.

Multiply your sum by 1500. This is your yearly income for Week Four Discussion 1.

Please use the following monthly expenses: Car payment = $283.15, Car insurance = $72, Utilities (includes water and power) = $242.77, Internet = $32, and Cell Phone = $79.95.

You also have a yearly educational bill of $7980 which includes textbooks and classes.

Calculate your monthly income.

What percent of your monthly income is the car payment?

Subtract the sum of your monthly expenses. Use this value to calculate what percent of your income is now available to spend for food, clothing, and your rent or mortgage.

Use the plan at the bottom of page 454, “Mathematics in Our World Revisited,” to calculate the monthly mortgage payment established by your monthly income.

Assume you can afford a down payment equal to 25% of your yearly income. What is the total purchase price can you afford for a home? Would this amount allow you to purchase a home in the area where you live?

Mathematics in Our World Revisited

How Much Can You Afford to Pay for a Home?

▲

Experts suggest that a person can afford to pay 28% of

his or her gross monthly income for a home mortgage.

Given this assumption and using Table 9-1 on page 435,

you can ﬁgure out how much you can afford to pay for a

home, as shown.

First ﬁnd the monthly income.

$36,000.00 ÷ 12 = $3000.00

Next ﬁnd 28% of the monthly income.

0.28 $3000.00 = $840.00

Hence you can afford a monthly mortgage payment of

$840.00.

Now to see what you can afford to borrow, look

up the number corresponding to 7% and 25 years in

Table 9-1 on page 435. It is 7.70. Set up an equation and

solve for x.

7.70x = $840

7.70x

7.70

=

840

7.70

x = $109.09

Multiply x by 1000 since the monthly payments in

Table 9-1 are per $1000.00 of the mortgage.

$109.09 1000 = $109,090

Hence, you can afford a mortgage of $109,090.

Finally, add your down payment of $10,000.00.

$109,090.00 + $10,000.00 = $119,090.00

You can purchase a home costing about $119,090.00.

(The process used here is the reverse of the process used

in Example 9-27 in this chapter.)