Use estimation to select the best response. Do not calculate. A $147,000 30-year loan at 10% + 1.5 points + $200 would have a comparison rate of __________.
A) 10%
B) 1.5%
C) less than 1.5%
D) more than 10%
E) less than 10% but more than 1.5%

Question

Quizplus · Accepted Answer

Points are prepaid interest, which increases the effective interest rate of the loan. Adding 1.5 points and $200 to a 10% loan would result in a comparison rate of more than 10%.

Use Estimation to Select the Best Response