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

\begin{tabular}{|l|l|}
\hline
\multicolumn{1}{|c|}{Component} & 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 to determine the correctness based on the provided mortgage details:

1. The homeowner is borrowing \[tex]$360,000: - False. The principal amount borrowed is \$[/tex]2,000,000, not \[tex]$360,000. 2. The monthly interest rate is 4 percent: - True. According to the given mortgage terms, the monthly interest rate is indeed 4%. 3. Monthly payments must be made for 30 years: - True. The total number of monthly payments is 360, which corresponds to a 30-year term. 4. The annual interest rate is 4.8 percent: - False. The annual interest rate actually is different and can be calculated from the monthly rate. The annual interest rate is \((1 + 0.04)^{12} - 1 \approx 60.1\%\). 5. The homeowner is borrowing \$[/tex]200,000:
- True. As stated in the table, the principal borrowed is indeed \[tex]$2,000,000. 6. Monthly payments must be made for 360 years: - False. The monthly payments must be made over 360 months, which equals 30 years, not 360 years. ### Summary: Here are the correct statements which accurately describe the terms of this mortgage: - The monthly interest rate is 4 percent. - Monthly payments must be made for 30 years. - The homeowner is borrowing \$[/tex]2,000,000.

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