Question

you want to purchase a house for $350,000 with a 10% down payment and thereby you need to finance $315,000 through a home mortgage loan which you signed today you start paying the loan in 6 months from today with 60 quarterly payments at an interest rate of 6% per quarter. Which of the following is true for the first payment? Where A is the loan payment.

. This is an immediate payment loan, where A = $350,000(AP 6%, 60) - This is an immediate payment loan, where A = $315,000(AIP 12%, 30) This is a deferred payment loan, where A = $315,000(FIP 6%, 1)(AIP 6%, 60) This is a deferred payment loan, where A = $350,000(FIP 6%, 2)(A1P 6%, 60)

Answer 1

Answer:

Correct answer is:

C. This is a deferred payment loan, where A = $315,000 ( F/P 6%, 1) (A / P 6%, 60)

Explanation:

The loan amount is $315,000 hence options A and D are incorrect.

Since the first payment will start in 6 months from today with 60 quarterly payments. It is deferred payment loan. Hence option B is also incorrect.

It is a deferred payment loan and payment is an annuity due with A = $315,000 ( F/P 6%, 1) (A / P 6%, 60)

Correct option is C.