Suppose You Are Ready to Buy Your First House

question 81

Multiple Choice

Suppose you are ready to buy your first house.To buy the house,you will take out a $140,000 mortgage from the bank.The bank offers you the mortgage for 30 years at an APR of 6.0% with interest compounded monthly.For your tenth monthly payment,what is the reduction in principal?

• A) $145.77
• B) $156.18
• C) $327.24
• D) $359.64

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Definitions:

Income

The financial gain earned by an individual or a company, usually measured over a specific time period and derived from various sources like sales or investments.

Construction Expense

Costs directly related to the construction of a building or infrastructure, including materials, labor, and other expenses incurred during the process of building.

Percentage-Of-Completion Method

An accounting technique used to recognize revenue and expenses of long-term contracts as a percentage of work completed during the period.

Actual Construction Costs

The total expenses incurred during the construction of a building or infrastructure, including materials, labor, and any other costs.