The monthly mortgage payment on your house is $821.69. it is a 30 year mortgage at 6.5% compounded monthly. how much did you borrow? 1. $ 85,000 2. $100,000 3. $115,000 4. $130,000 5. $140,000

The formula for figuring the monthly payments on such a loan is

... A = P (r/12) / (1 - (1 + r/12) ^ (-12t))

where r is the annual interest rate (.065), P is the principal amount (we want to find), t is the number of years (30), and A is the monthly payment.

Filling in the given values, we have

... 821.69 = P (.065/12) / (1 - (1 +.065/12) ^ (-12*30)) = 0.00632068·P

Then the principal amount is

... P = 821.69/0.00632068 = 130,000.25

The most appropriate choice is ...

... 4. $130,000