Real Estate Math

A buyer assumes an existing Iowa mortgage with an outstanding balance of $125,000 at 5.5% annual interest. The next monthly payment is due. How much of that payment is interest?

A$572.92✓ Correct
B$687.50
C$1,145.83
D$458.33

Explanation

Monthly interest = Outstanding Balance x (Annual Rate / 12) = $125,000 x (0.055 / 12) = $125,000 x 0.004583 = $572.92.

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