Answers PERFIN Personal Finance Sem 2 26-27 Lesson 3: BankruptcyQuestion 12

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QuizMultiple Choice

Lesson 3: Bankruptcy

Question 12 • [PERFIN] Personal Finance, Sem 2 (26-27)

Since they filed bankruptcy in the past, a couple ends up paying a 12% fixed rate for a 30 year mortgage. With a better credit rating, they could have gotten the loan at a rate of 8%. If their loan amount is $140,000, how much more per month will the couple be paying for their mortgage as a result of their bankruptcy?

Answer

A

$137,532.67

B

$412.79

C

$1,440.06

D

$260.37

Explanation

Use the fixed-rate mortgage payment formula with 360 monthly payments. At 12%, the monthly payment on $140,000 is about $1,440.06; at 8%, it is about $1,027.27. Subtracting gives $1,440.06 − $1,027.27 = $412.79 more per month. The correct choice is $412.79.

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