Intermediate Value Theorem and mortgage payments You are

Chapter 2, Problem 58

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Intermediate Value Theorem and mortgage payments You are shopping for a $150,000, 30-year (360-month) loan to buy a house. The monthly payment is m1r2 = 150,0001r>122 1 - 11 + r>122-360, where r is the annual interest rate. Suppose banks are currently offering interest rates between 6% and 8%. a. Use the Intermediate Value Theorem to show there is a value of r in (0.06, 0.08)an interest rate between 6% and 8%that allows you to make monthly payments of $1000 per month. b. Use a graph to illustrate your explanation to part (a). Then determine the interest rate you need for monthly payments of $1000.

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