What Is Wrong, If Anything, with the Following Statement? Explain $7.5 \% + \frac { 1 } { 2 } \text { point } + \$ 200$

question 82

Short Answer

What is wrong, if anything, with the following statement? Explain your reasoning. If you obtain a quotation for a home costing $315,000, obtain a 30-year loan at $7.5 \% + \frac { 1 } { 2 } \text { point } + \$ 200$ , and make a 10% down payment, you can find the total amount of interest paid on this loan as follows: $\$ 315,000 \times 0.9 = \$ 283,500$ the Table entry for a 7.5%, 30-year loan is 6.99, so the monthly payment is $$\$ 6.99 \times 283.5 = 1,981.67$$ . Then, $\begin{aligned}I & = A - P \\& = \$ 1,981.67 ( 360 ) - \$ 315,000 \\& = 398,401.20\end{aligned}$

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Definitions:

Financial Statements

Reports that provide detailed information about a company's financial performance, including balance sheets, income statements, and cash flow statements.

Common Law Fraud

A cause of action under tort law that involves misrepresentation, deceit, or concealment by one party to induce another to part with something of value or surrender a legal right.

Privity

The relationship between parties that is necessary for the enforcement of contracts, ensuring that only parties involved in the contract can sue or be sued under its terms.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity, presenting a structured report of financial performance over a specific period.