Question

Paul's mom, Gina, owns her home outright, without a mortgage. It is currently worth $100,000. If she could get five percent interest by investing her money in a secure government bond, what is the implicit annual interest cost of her home?

Answer 1

Use the formula   i = p*r*t.

Here, p = $100000, r = 0.05 and t = 1 (year)

The interest would be   i = $100000*0.05*1 = $5000 per year.

Answer 2

Answer:

The answer is: $ 5,000.

Step-by-step explanation:

The annual interest cost would be the result of multiplying the current value, by 5% and for 1 year, that is: 100,000 x 0.05 x 1 = $ 5000.

The answer is: $ 5,000.