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A House Is for Sale for $250,000

Question 4

Multiple Choice

A house is for sale for $250,000.You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000,you can obtain a loan with a 6% rate of interest or (2) if you make a down payment of $50,000,you can obtain a loan with a 5% rate of interest.What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan?


A) 1.00%
B) 6.00%
C) 12.95%
D) 18.67%

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