Question 32 • ****Spring 2026 Financial Math - MA2007 MQS21QXV
Peter wants to buy a duplex with a purchase price of $226,950. Peter can afford a 10% down payment. Peter earns $2,985 a month and wants to spend no more than 10% of his income on his mortgage payment. Peter is going to rent out the other half of the duplex. He thinks that if he charges $900 a month in rent this will cover the remainder of his mortgage payment. Given that Peter has a 30 year mortgage with a fixed rate of 6.25%, how should Peter adjust how much he charges for rent of the other half of the duplex?
Answer
A
Peter should increase the rent by $200.
B
Peter should increase the rent by $60.
C
Peter should increase the rent by $10.
D
Peter should keep the rent at $900.
Explanation
With 10% down, Peter borrows $226,950 × 0.90 = $204,255. A 30-year mortgage at 6.25% has a monthly payment of about $1,257. Peter can contribute $298.50 from his income (10% of $2,985), so rent needs to cover about $1,257 − $298.50 = $958.50. That is about $60 more than $900, so he should increase the rent by $60.
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