What Is Wrong, If Anything, with the Following Statement? Explain $$6.5 \% + \frac { 3 } { 4 } \text { point } + \$ 200$$

question 225

Short Answer

What is wrong, if anything, with the following statement? Explain your reasoning. If you obtain a quotation for a home costing $320,000, obtain a 30-year loan at $$6.5 \% + \frac { 3 } { 4 } \text { point } + \$ 200$$ , and make a 10% down payment, you can find the comparison rate as follows: $$\text { COMPARISON RATE } = 0.065 + 0.125 \left( 0.0075 + \frac { 200 } { 288,000 } \right) \approx 6.6 \%$$

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