MBA 501 – You plan to take out a 30-year fixed rate mortgage for $125,000
MBA 501 – You plan to take out a 30-year fixed rate mortgage for $125,000
Subject: Business   / Finance
Question
You plan to take out a 30-year fixed rate mortgage for $125,000. Let P(r) be your monthly payment if the interest rate is r% per year, compounded monthly. Interpret the equations
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(a) P(7) = 831.63 and (b) P'(7 ) = 83.95.
(a) Interpret P(7)equals831.63. Select the correct answer below
A. If the interest rate on the mortgage is 8%, the monthly payment will be $831.63.
B. If the interest rate on the mortgage is 7%, the monthly payment will be $83.95.
C. If the interest rate on the mortgage is 8%, the monthly payment will be $83.95.
D. If the interest rate on the mortgage is 7%, the monthly payment will be $831.63.
(b) InterpretP'(7) = 83.95.
Select the correct answer below.
A. If the interest rate increases from 7% to 8%, the monthly payment will decrease by approximately $83.95
B. If the interest rate decreases from 8% to 7%, the monthly payment will be approximately $831.63
C. If the interest rate increases from 7% to 8%, the monthly payment will increase by approximately $83.95
D. If the interest rate decreases from 8% to 7%, the monthly payment will increase by approximately $831.63.