A Young Couple Buying Their First Home Borrows $72,000 for 28

question 10

Multiple Choice

A young couple buying their first home borrows $72,000 for 28 years at 8.8%, compounded monthly, and makes payments of $577.59. After 2 years, they are able to make a one-time payment of $5,000 along with their 24^th payment. How much will the couple save over the life of the loan by paying the extra $5,000? Round your answer to the nearest dollar. ​

• A)$344,731
• B)$43,410
• C)$33,410
• D)$317,006
• E)$66,820

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Definitions:

Price

The financial sum necessary to obtain a good, service, or property.

Budget Constraint

An economic model that depicts the combination of goods and services an individual, household, or firm can purchase, given their income and prevailing prices.

Leftover Income

The amount of money an individual or household has after all expenses and taxes have been paid; also known as disposable income.

Bundle

A collection or group of goods or services that are considered together as a single combined unit.