(3) Suppose you are buying your first condo for $145,000, and you will make a $15,000 down payment. You have arranged to finance
the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?
1 answer:
Answer:
Explanation:
In the given question, we have to find out the monthly payment. In this case, the interest rate is divided by 12 months and the years are multiplied by the 12 months
So,
The interest rate would be = 6.5% ÷ 12 months = 0.541%
The total months would be = 30 years × 12 months = 360 months
And, the present value would be equal to
= First condo amount - down payment
= $145,000 - $15,000
= $130,000
The calculation is shown in the spreadsheet. Kindly find the attachment
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Answer: C. The ATC curve eventually slopes upward because average variable cost eventually increases
Explanation:
The Law of Diminishing Marginal Returns causes the Average Total Cost curve to eventually slope upwards because the Average Variable Cost will increase.
Why?
At first, with production increasing, a firm will be very efficient at producing a certain good thereby driving the cost down per unit. As time goes on however, the law of Diminishing Marginal Returns comes into play as more is invested into the business. The cost per unit will therefore rise which will lead to the ATC curve going upwards.
I have included a simple graph to illustrate.
If you need any clarification do react or comment.
