You Have a Home with a Market Value of $200,000

question 72

Short Answer

You have a home with a market value of $200,000.Your total equity in the home is $40,000.The maximum home equity loan available if the bank will loan 80 percent based on equity invested is
(a)$28,000.
(b)$32,000.
(c)$112,000.
(d)$128,000.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Benefit

An advantage or profit gained from something.

Foregone Benefit

The lost potential gain from other alternatives when one alternative is chosen.

Alternative Cost

Also known as opportunity cost, it represents the benefit that is missed or given up when choosing one alternative over another.