Ms Madison Has an Existing Loan with Payments of $782

question 11

Multiple Choice

Ms. Madison has an existing loan with payments of $782.34. The interest rate on the loan is 10.5% and the remaining loan term is 10 years. The current balance of the loan is $57,978.99. The home is now worth $120,000 and Ms. Madison would like to borrow an additional $30,000 through a wraparound loan which would increase the debt to 487,978.99. Terms of the wraparound loan are 12.25% interest with monthly payments for 10 years. What is the incremental cost of borrowing the extra $30,000 through a wraparound loan?

• A) 15.47%
• B) 11.38%
• C) 12.96%
• D) 13.41%

---

Definitions:

Crystal Meth

A highly addictive, crystalline drug that stimulates the central nervous system, producing effects such as increased energy and euphoria.

Marijuana

A psychoactive drug derived from the Cannabis plant, used for medical or recreational purposes, known for its effective properties.

MDMA

A psychoactive drug primarily used recreationally for its effects on mood, perception, and increased energy.

Liquid Form

Describes a substance that is in a state or phase of matter where it has a definite volume but adapts to the shape of its container.