Use the Following Information to Answer the Question(s)below

question 5

Multiple Choice

Use the following information to answer the question(s) below.
Dagny Taggart has just purchased a home and taken out a $400,000 mortgage.The mortgage has a 30-year term with monthly payments and has an APR of 5.4%.
-The total amount of principal that Dagny will pay during the first three months of her mortgage is closest to:

• A)$1340.
• B)$1345.
• C)$5395.
• D)$6740.

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Definitions:

Straight-Line Amortization

A method of allocating an intangible asset's cost evenly across its useful life, resulting in a consistent expense amount each period.

Theoretical Difference

Refers to the conceptual distinctions between ideas, methods, or phenomena.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debt over a specific period.

Present Value

The present-day evaluation of a future financial amount or cash flow streams, using a predetermined rate of return.