Which One of the Following Financing Terms Will Provide the Lowest

question 70

Multiple Choice

Which one of the following financing terms will provide the lowest monthly payment for a fixed-rate $175,000 mortgage? (No calculations are required.)

• A) 10-year, 5.5 percent
• B) 10-year, 6.0 percent
• C) 15-year, 5.5 percent
• D) 15-year, 6.0 percent
• E) 30-year, 5.5 percent

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Definitions:

Exclusive Right

Exclusive right refers to a legal provision granting someone the sole authority to exploit a particular property, product, or service for a specified purpose.

Natural Monopoly

A situation in which a single firm can supply a product or service to an entire market more efficiently than multiple companies, often due to high fixed costs.

Economies of Scale

The cost advantage that arises with increased output of a product, leading to a fall in the per-unit production cost.

Average Total Cost

The total cost of production divided by the number of units produced, essentially representing the per-unit production cost.