The Johnsons Have Accumulated a Nest Egg of $25,000 That

Multiple Choice

The Johnsons have accumulated a nest egg of $25,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of $1,000/month in monthly payments (to take advantage of their tax deductions) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1,800. If local mortgage rates are 9.5%/year compounded monthly for a conventional 40-year mortgage, what is the price range of houses that they should consider? ​
If the Johnsons decide to secure a 20-year mortgage instead of a 40-year mortgage, what is the price range of houses they should consider when the local mortgage rate for this type of loan is 9%?
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A) The price of houses for 40-yr mortgage lies between $5,461,292 and $9,810,325;
For 20-yr mortgage - between $692,887 and $1,227,196.
B) The price of houses for 40-yr mortgage lies between $148,447 and $247,205;
For 20-yr mortgage - between $136,145 and $225,061.
C) The price of houses for 40-yr mortgage lies between $136,145 and $225,061;
For 20-yr mortgage - between $148,447 and $247,205.