Multiple choice

1. You currently have a mortgage payment of $1,798 on an original 15-year loan for $200,000 at 7%. How many months would you need to live in the home to obtain a simple payback (no MARR) on a new loan at 5% with a refinance charge of $2,500? (pick closest answer)

a. 23

b. 18

c. 12

d. 26

2. You plan to buy a $200,000 home. The bank suggests two options: (1) 10% down payment, $100/month PMI for the first 4 years, 30-year mortgage at 6% APR, and (2) 20% down payment, 30-year mortgage at 5% APR. What is the difference in the total mortgage

payments (including interest, principal, and PMI) between these two options on the 30th payment?

a. $320

b. $415

c. $215

d. $220

3. You borrow $20,000 to purchase a small cottage. If your loan rate is 8.5% interest per year and you are paying it over 60 months what is your loan payment amount?

a. $520.43

b. $410.33

c. $626.25

d. $333.33

4. Which of the following is the accounting equation?

a. Income - Expenses = Gross Income

b. Liabilities + Owners’ Equity = Assets

c. Income - Cost of Goods Sold = Gross Income

d. Assets + Owners’ Equity = Liabilities