A House Is for Sale for $250,000

question 4

Multiple Choice

A house is for sale for $250,000.You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000,you can obtain a loan with a 6% rate of interest or (2) if you make a down payment of $50,000,you can obtain a loan with a 5% rate of interest.What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan?

• A)1.00%
• B)6.00%
• C)12.95%
• D)18.67%

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Definitions:

Vertebrate Eye

A complex organ in vertebrates that allows for vision by detecting light and converting it into neural signals.

Genetic Engineering

The deliberate modification of the characteristics of an organism by manipulating its genetic material.

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A group of Galápagos Islands' finches that played a critical role in Charles Darwin's study of natural selection.

Galápagos Islands

An archipelago of volcanic islands in the Pacific Ocean, known for their unique endemic species and significant contribution to the development of Charles Darwin's theory of evolution by natural selection.