Problem:
An engineering graduate plans to buy a home. He has been advised that his monthly house and property tax payment should not exceed 35% of his disposable monthly income. After researching the market, he determines he can obtain a 15 year home loan for 3.5% annual interest per year, compounded monthly. His monthly property tax payment will be approximately $240.
Requirement:
Question 1: What's the maximum amount he can pay for a house If his disposable monthly e is $3,500?
Question 2: What Is the total amount of interest that will be paid on the loan if it held for the 15 year period?
Note: Provide support for rationale.