A Small Office Building Is Purchased of $1,200,000 with a Balloon

question 28

Multiple Choice

A small office building is purchased of $1,200,000 with a balloon mortgage that is due at the end of year 10. Payments are based on a 25 year amortization period. If one point was charged, what annual amount can be deducted for tax purposes?

• A) $1,200
• B) $480
• C) $0
• D) $800

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Definitions:

Buying Behavior

The decision processes and acts of individuals involved in buying and using products.

Opportunity Cost

The cost of an alternative that must be forgone as a result of choosing another option, representing the benefits that could have been received by taking a different path.

Free Lunch

An expression indicating that obtaining goods or services without cost or effort is impossible in economic terms, as there's always a trade-off.

Economic Theory

An organized set of concepts and principles that aims to explain how economies function and to provide a framework for economic policy decisions.