A Couple Who Wants to Purchase a Home with a Price

question 8

Multiple Choice

A couple who wants to purchase a home with a price of $325,000 has $100,000 for a down payment. If they can get a 25-year mortgage at 8% per year, paid on the unpaid balance, what is the total amount they will pay
Before they own the house outright? How much interest will they pay over the life of the loan?

• A) $620,977; $295,977
• B) $752,520; $427,520
• C) $852,520; $527,520
• D) $520,977; $195,977

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Definitions:

Fringe Benefits

Fringe benefits are additional compensation provided to employees beyond their normal wages, including health insurance, retirement plans, and paid time off.

Contribution Margin

Represents the amount of revenue remaining after deducting variable costs, contributing towards covering fixed costs and generating profit.

Production Capacity

The maximum volume of products or services a company can produce under normal working conditions.

Target Costing

A pricing method where the selling price of a product is determined first, and then production costs are managed to ensure the product can be produced within that target cost.