On August 1 of the Current Year,Terry Refinances Her Home

question 21

Multiple Choice

On August 1 of the current year,Terry refinances her home and borrows $240,000.Terry is required to pay two points on the loan.The loan is secured by the residence and the charging of points is an established business practice in the area.The term of the loan is 20 years,beginning on August 1 of the current year.How much,if any,of the points may Terry deduct in the current year?

• A)$0
• B)$100
• C)$240
• D)$4,800

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Definitions:

Returns To Scale

The rate at which production output increases as a result of a proportional increase in all inputs or resources.

Marginal Product

The increase in output resulting from a one-unit increase in the input, keeping all other inputs constant.

Factor X

A placeholder term for an unspecified or unknown factor that can influence outcomes in a given situation or calculation.

Production Function

A production function is an equation that relates the quantity of output produced to the quantities of inputs used in production.