Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? a. Exactly 10% of the first monthly payment represents interest. b. The monthly payments will increase over time. O c. The amount representing interest in the first payment would be higher if the nominal interest rate were 796 rather than 1096. O d. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. O e. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 15P
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Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?
O a. Exactly 10% of the first monthly payment represents interest.
b. The monthly payments will increase over time.
O c. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 109%6.
d. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity.
O e. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
Transcribed Image Text:Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? O a. Exactly 10% of the first monthly payment represents interest. b. The monthly payments will increase over time. O c. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 109%6. d. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. O e. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
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