Real Estate Math
A mortgage has a balance of $180,000 at 5.5% annual interest. What is the monthly interest charge?
A$825✓ Correct
B$990
C$750
D$870
Explanation
Monthly interest = Principal x Annual Rate / 12 = $180,000 x 0.055 / 12 = $9,900 / 12 = $825. This is the interest portion of the next monthly payment. As the balance decreases over time, the interest portion decreases and the principal portion increases (amortization).
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