When Purchasing a $210,000 House,a Borrower Is Comparing Two Loan

question 16

Multiple Choice

When purchasing a $210,000 house,a borrower is comparing two loan alternatives.The first loan is a 90% loan at 10.5% for 25 years.The second loan is an 85% loan for 9.75% over 15 years.Both have monthly payments and the property is expected to be held over the life of the loan.What is the incremental cost of borrowing the extra money?

• A)20.25%
• B)16.17%
• C)11.36%
• D)12.42%

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Definitions:

Adolescent

The transitional stage of physical and psychological development that occurs between childhood and adulthood, typically between the ages of 13 and 19.

Temperament

An individual's inherent personality traits, particularly those related to their emotional and behavioral responses from early childhood.

Chess And Thomas

Reference to Stella Chess and Alexander Thomas, known for their research in child development, notably the concept of temperament.

Scheme

A systematic plan or arrangement for attaining some particular object or putting a particular idea into effect.