Which of the Following Statements Regarding the Break-Even Point for Paying

question 23

Multiple Choice

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

• A)All else equal, the break-even point for paying points on an original mortgage is longer than the break-even point for paying points on a refinance.
• B)All else equal, the break-even point for paying points on an original mortgage is longer for a taxpayer who does not make extra principal payments each year on the loan than for a taxpayer who does make additional principal payments each year on the loan.
• C)All else equal, the break-even point for a taxpayer paying points on an original mortgage is longer when the taxpayer's marginal income tax rate increases in the years subsequent to the original financing compared to a taxpayer whose marginal tax rate does not change in the years subsequent to the year in which the loan is executed.
• D)None of the choices are correct.

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Definitions:

Athletic Prowess

Describes an individual's exceptional skill, ability, or strength in sports and physical activities.

Intellectual Inferiority

refers to the perception or belief that certain individuals or groups have lower cognitive abilities compared to others.

Step-variable

Costs that remain fixed over small ranges of production or activity levels but can change with larger shifts in activity.

Mixed

A category that includes a combination of various elements or types.