You Have Just Take Out a 30-Year,$120,000 Mortgage on Your

question 91

Multiple Choice

You have just take out a 30-year,$120,000 mortgage on your new home.This mortgage is to be repaid in 360 equal end-of-month installments.If each of the monthly installments is $1,500,what is the effective annual interest rate on this mortgage?

• A) 15.87%
• B) 14.75%
• C) 13.38%
• D) 16.25%
• E) 16.49%

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Definitions:

Financial Statement

A comprehensive report detailing a company's financial performance, position, and cash flows over a specific period.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance based on accounting principles.

Drawee

In financial terms, this is the entity upon which a cheque or draft is drawn and is responsible for paying the amount.

Financial Statement

A summarized record that shows the financial health of a business or individual, including components like balance sheets, income statements, and cash flow statements.