Rob, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 10.5% twenty-year mortgage , payable at $998.38 a month. At the end of the first month, Rob receives a statement from the bank indicating that only $123.38 of principle was paid during the month. At this rate, he calculates it will take over 67 years to pay off the mortgage. Is he right? Discuss.
Rob, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 10.5% twenty-year mortgage , payable at $998.38 a month. At the end of the first month, Rob receives a statement from the bank indicating that only $123.38 of principle was paid during the month. At this rate, he calculates it will take over 67 years to pay off the mortgage. Is he right? Discuss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Rob, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 10.5% twenty-year mortgage , payable at $998.38 a month. At the end of the first month, Rob receives a statement from the bank indicating that only $123.38 of principle was paid during the month. At this rate, he calculates it will take over 67 years to pay off the mortgage. Is he right? Discuss.
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