Real Estate Math
A Wyoming seller agrees to carry a 2nd mortgage for $40,000 at 6% interest-only for 5 years. What is the annual interest payment?
A$1,200
B$2,000
C$2,400✓ Correct
D$8,000
Explanation
Annual interest = Principal x Rate = $40,000 x 6% = $2,400. On an interest-only loan, all payments are interest—no principal is repaid during the term. The full $40,000 balance is due at the end of the 5-year term.
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