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The table shows the terms of a fixed-rate mortgage.

\begin{tabular}{|l|r|}
\hline \multicolumn{1}{|c|}{ Component } & \multicolumn{1}{c|}{ Cost } \\
\hline (P) Principal & [tex]$\$[/tex]200,000[tex]$ \\
\hline (R) Monthly interest rate & $[/tex]4\%[tex]$ \\
\hline \begin{tabular}{l}
(n) Total number of \\
monthly payments (30-year term)
\end{tabular} & 360 \\
\hline (M) Monthly payment & \\
\hline
\end{tabular}

Which accurately describes the terms of this mortgage? Check all that apply.

A. The homeowner is borrowing $[/tex]\[tex]$360,000$[/tex].
B. The monthly interest rate is 4 percent.
C. Monthly payments must be made for 30 years.
D. The annual interest rate is 4.8 percent.
E. The homeowner is borrowing [tex]$\$[/tex]200,000$.
F. Monthly payments must be made for 360 years.



Answer :

GinnyAnswer
Let's analyze each statement one by one and check if it accurately describes the terms of the given fixed-rate mortgage.

### Given Data

- Principal (P): \[tex]$200,000 - Monthly interest rate (R): 4% - Number of monthly payments (n): 360 (which indicates a 30-year term as 30 years * 12 months per year = 360 monthly payments) ### Statements to Verify 1. The homeowner is borrowing \$[/tex]360,000.
- The principal given in the table is \[tex]$200,000. Therefore, this statement is false. 2. The monthly interest rate is 4 percent. - The table directly states that the monthly interest rate is 4%. Thus, this statement is true. 3. Monthly payments must be made for 30 years. - The number of monthly payments is given as 360. Since 360 payments correspond to 30 years (12 payments per year * 30 years), this statement is true. 4. The annual interest rate is 4.8 percent. - The monthly interest rate provided is 4%, not the annual interest rate. In fact, if we had to consider the annual interest rate, it would be calculated differently (e.g., multiplying the monthly rate by 12 or using the compound interest formula). Since no such annual rate is given nor calculated directly in this question, this statement is false. 5. The homeowner is borrowing \$[/tex]200,000.
- The principal amount given in the table is indeed \[tex]$200,000. Thus, this statement is true. 6. Monthly payments must be made for 360 years. - The table states that the total number of monthly payments is 360, which corresponds to 30 years, not 360 years. Therefore, this statement is false. ### Recap of Evaluation - The homeowner is borrowing \$[/tex]360,000: False
- The monthly interest rate is 4 percent: True
- Monthly payments must be made for 30 years: True
- The annual interest rate is 4.8 percent: False
- The homeowner is borrowing \[tex]$200,000: True - Monthly payments must be made for 360 years: False Thus, the accurate descriptions of the terms of this mortgage are: - The monthly interest rate is 4 percent. - Monthly payments must be made for 30 years. - The homeowner is borrowing \$[/tex]200,000.

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