What is the amount being financed? If Darrell chooses the 4-point 7% loan, what will be his total outlay in points and payments after 48 months? If Darrell chooses the 3-point 7.25% loan, what will be his total outlay in points and payments after 48 months?
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property.
Darrell Frye is planning to buy an office building at a cost of $988,000. He must pay 10% down and has a choice of financing terms. He can select from a 7% 30-year loan and pay 4 discount points, a 7.25% 30-year loan and pay 3 discount points, or a 7.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for four years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical.
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What is the amount being financed?
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If Darrell chooses the 4-point 7% loan, what will be his total outlay in points and payments after 48 months?
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If Darrell chooses the 3-point 7.25% loan, what will be his total outlay in points and payments after 48 months?
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If Darrell chooses the 2-point 7.5% loan, what will be his total outlay in points and payments after 48 months?
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Of the three choices for a loan, which results in the lowest total outlay for Darrell?
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