A Client Has Taken Out a $300,000 Loan,which Must Be

question 30

Multiple Choice

A client has taken out a $300,000 loan,which must be repaid with equal annual payments for the next 30 years.If the interest rate on the loan is 4.5%,what are the annual payments?

• A)$18,417.46
• B)$19,455.46
• C)$12,455.46
• D)$17,417.46
• E)None of the above.

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, not always perfect but often effective for quick judgments.

Neoclassical Economists

Economists who focus on how consumers make choices based on their preferences and budgets, and how those choices affect the use of resources and the distribution of goods.

Better Off

A term indicating an improvement in someone's situation or condition, often measured in terms of financial wellbeing, health, or quality of life.

Behavioral Economists

Behavioral economists study how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions, often challenging the assumption of rational decision-making.