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jack and jill are considering buy a house and looking into various finance alternatives. Under one alternative, they would ta
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Answer #1

Option (1) is correct

In a interest only loan, only interest is paid periodically. Principal amount is repaid after the expiry of loan period. The calculation of monthly payment is below:

Monthly interest (payment) = 5% * $300000 * 1/ 12 = $1250

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