When a Debt Is Refinanced, Sometimes the Term of the Loan

question 229

Multiple Choice

When a debt is refinanced, sometimes the term of the loan (that is, the time it takes to repay the debt) is shortened. Suppose the current interest rate is 7%, and the current debt is $100,000. The monthly payment R of the refinanced debt is a function of the term of the loan t in years. If we represent this function by , then the following table defines the function. ​

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Source: Comprehensive Mortgage Payment Tables, Publication No. 492, Financial Publishing Co., Boston
Choose the correct verbal description of .
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• A) From the table, the value of is the yearly payment to repay a $100,000 loan in 12 years when the interest rate is 7%.
• B) From the table, the value of is the monthly payment to repay half of a $100,000 loan in 12 years when the interest rate is 7%.
• C) From the table, the value of is the weekly payment to repay a $100,000 loan in 12 years when the interest rate is 7%.
• D) From the table, the value of is the monthly payment to repay a $100,000 loan in 12 years when the interest rate is 7%.
• E) From the table, the value of is the monthly payment to repay a $100,000 loan in 12 years when the interest rate is 7%.

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