Yolanda closed on a 20 year home loan for $83,000. she chooses to buy only 1 point at closing. by buying a point at her closing, yolanda reduced her monthly payment by $7.63. based on the fact that yolanda chose to buy a point at closing, what would you infer is the minimum amount of time that she will own the home?
(a) 6 years
(b) 11 years
(c) 8 years
(d) 16 years

(B) 11 years

Explanation:

1 point = 1% of the loan:  83,000 x 1% = 830 cost of the point

The poin is used to decrease the interest rate of the loan, this is a payment which generates savings throught time.

Each month she wil be paying $7.63 less.

To make the investment on the poin wrothwhile, it will keep the house until break even at least.

poin cost / saving per month = months to break-even

830/7.63 = 108.78 months

108.78 months = 9.065 years

It would best to infer it will keep the house for 9 years or more.

Based on the option, 11 years would be the minimun amount of time.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

hope this

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