A customer has a first mortgage of $100,000 at 5.5% and a second mortgage of $50,000 at 7.8%. What is the average rate of mortgage that the customer pays?
A) 6.7%
B) 7%
C) 5.9%
D) 6.5%
E) 6.3%

Question

Quizplus · Accepted Answer

To find the average rate, you calculate the weighted average of the two rates based on the amounts of the mortgages. The calculation is as follows: ((100,000 * 5.5%) + (50,000 * 7.8%)) / (100,000 + 50,000) = (5,500 + 3,900) / 150,000 = 9,400 / 150,000 = 6.27%, which rounds to 6.3%.

A Customer Has a First Mortgage of $100,000 at 5