A Mortgage Requires Payments of $1000

question 63

Multiple Choice

A mortgage requires payments of $1000.00 at the end of every month for twenty-five years. If interest is 6% compounded semi-annually, calculate the principal of the loan.

• A) $156 297.23
• B) $155 206.86
• C) $46 188.41
• D) $300 000.00
• E) $33 328.64

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Definitions:

Sampling Distribution

The distribution that indicates the probabilities of a given statistic, which is acquired from a random sample.

T-distribution

A probability distribution used in statistics that arises when estimating the mean of a normally distributed population in situations where the sample size is small and the population standard deviation is unknown.

Standard Normal Distribution

Normal distribution measured in standard deviation units with a mean equal to 0 and a standard deviation equal to 1.

Sampling Distribution

The distribution pattern of probabilities for a certain statistic obtained through random sampling.