Use estimation to select the best response. Do not calculate. A $49,000 30-year loan at
10% + 1 point + $200 origination fee
Would have a comparison rate of
A) more than 10%
B) 10%
C) less than 10%
__________ (A, B or C)

Question

Quizplus · Accepted Answer

The comparison rate includes not only the interest rate but also any additional fees and charges associated with the loan. In this case, the 1 point (which is 1% of the loan amount, or $490) plus the $200 origination fee increases the overall cost of the loan beyond just the 10% interest rate, making the comparison rate more than 10%.

Use Estimation to Select the Best Response