Which of the Following Statements Regarding a 30-Year Monthly Payment

question 116

Multiple Choice

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?

• A) Exactly 8% of the first monthly payment represents interest.
• B) The monthly payments will decline over time.
• C) A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
• D) The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity.
• E) The amount representing interest in the first payment would be higher if the nominal interest rate were 6% rather than 8%.

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Definitions:

Weighted Average Method

A method for calculating the cost of goods sold and the final inventory value by using the average cost of all items available for sale during the accounting period, weighted by quantity.

Total Equivalent Units

A calculation used in process costing to convert partial units of production into full units for easier cost assignment.

Conversion Costs

Costs incurred in the process of converting raw materials into finished goods, typically including labor and overhead expenses.

Roasting Department

A specialized division within a company or factory where coffee beans are roasted.