Your Grandmother Takes a Reverse Annuity Mortgage on Her House

question 6

Multiple Choice

Your grandmother takes a reverse annuity mortgage on her house for $160,000 at 7.00% for five years.Her payments will be an equal annual annuity of $26,002.How much interest does she pay over the term of the loan?

• A) $21,918
• B) $20,887
• C) $29,988
• D) $34,399
• E) $42,171

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Definitions:

Expected Value

The long-run average value of repetitions of the same experiment or random trial.

Sample Statistic

A measure derived from a sample portion of a population, typically used to estimate the characteristics of the entire population.

Population Parameter

A population parameter is a numerical value that represents a characteristic of an entire population, such as its mean or standard deviation.

Point Estimate

A statistical measure that provides the best single value estimate of a population parameter.