Which of the Following Statements Regarding a 20-Year (240-Month)$225, 000

question 55

Multiple Choice

Which of the following statements regarding a 20-year (240-month) $225, 000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

• A) The outstanding balance declines at a slower rate in the later years of the loan's life.
• B) The remaining balance after three years will be $225, 000 less one third of the interest paid during the first three years.
• C) Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments)are constant.
• D) Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant.
• E) The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.

---

Definitions:

Component Parts

Individual pieces or elements that are assembled to form a finished product.

Production Goods

Products and materials that are used in the manufacturing process to produce the final goods for consumption or sale.

Accessory Equipment

Supplementary components or items that enhance or complete the functionality of a main product or system.

Pneumatic Nail Gun

A tool powered by compressed air used for driving nails into wood or other materials, significantly speeding up construction and carpentry projects.