Use the following information to answer the question(s)below.
Dagny Taggart has just purchased a home and taken out a $400,000 mortgage.The mortgage has a 30-year term with monthly payments and has an APR of 5.4%.
-The total amount of interest that Dagny will pay during the first three months of her mortgage is closest to:
A)$1345.
B)$5380.
C)$5395.
D)$6740.

Question

Quizplus · Accepted Answer

The monthly interest rate is 5.4%/12 = 0.45%. The interest for the first month is $400,000 * 0.45% = $1,800. For the second month, the principal is slightly reduced, so the interest is slightly less, and similarly for the third month. The total interest over the first three months is approximately $5,395.

Use the Following Information to Answer the Question(s)below