Which of the Following Statements Regarding the Break-Even Point for Paying

question 32

Multiple Choice

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

• A) All else equal, the break-even point for paying points on an original mortgage is longer than the break-even point for paying points on a refinance.
• B) All else equal, the break-even point for paying points on an original mortgage is longer for a taxpayer who does not make extra principal payments each year on the loan than for a taxpayer who does make additional principal payments each year on the loan.
• C) All else equal, the break-even point for a taxpayer paying points on an original mortgage is longer when the taxpayer's marginal income tax rate increases in the years subsequent to the original financing compared to a taxpayer whose marginal tax rate does not change in the years subsequent to the year in which the loan is executed.
• D) None of these statements is correct.

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Definitions:

Cerebrum

The cerebrum is the largest part of the brain, responsible for higher brain functions such as thought, action, reasoning, emotion, and memory.

Inferior Colliculi

Pair of structures located in the midbrain, involved in auditory processing and acting as a major relay center for sound information.

Pyramids

Ancient massive structures with a square base and four triangular sides, mainly found in Egypt as tombs for pharaohs.

Sensory Tracts

Nerve pathways in the central nervous system that transmit sensory information from the body to the brain.