A House Is for Sale for $250,000

question 8

Multiple Choice

A house is for sale for $250,000. You have a choice of two 20-year mortgage loans with monthly payments: 1) if you make a down payment of $25,000, you can obtain a loan with a 6% rate of interest or 2) if you make a down payment of $50,000, you can obtain a loan with a 5% rate of interest. What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan?

• A) 1.00%
• B) 6.00%
• C) 12.95%
• D) 18.67%
• E) 20.10%

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Definitions:

Responsibility

The state or fact of having a duty to deal with something or of having control over someone, often linked with accountability.

Ownership Culture

An organizational culture where employees have a stake in the company's success, often through stock ownership, leading to increased engagement and productivity.

Share Options

Financial incentives given to employees that grant them the right to buy the company's shares at a set price after a certain period of time.

Gainsharing Plans

Incentive programs that share the cost savings or increased profits with employees, often tied to performance improvements.