A borrower takes out a $250,000 mortgage at a 5% annual interest rate. What is the interest due for the first month?
Correct Answer
B) $1,042
To find the first month's interest, multiply the loan amount by the annual interest rate and divide by 12 months: $250,000 × 0.05 ÷ 12 = $1,041.67, which rounds to $1,042.
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