67. How much will the borrower pay in discount points?
Answer: C
The borrower will pay $6,400 in discount points.
In this scenario, the borrower is required to pay $6,400 in discount points, which typically represents a percentage of the loan amount aimed at lowering the interest rate.
A) $1,600
This option is incorrect as it significantly underestimates the typical cost of discount points based on standard loan amounts. Discount points are generally calculated as a percentage of the loan amount, and $1,600 would not align with common pricing structures for points.
B) $4,000
While $4,000 is a higher amount than option A, it still falls short of reflecting the correct calculation of discount points for the given loan scenario. This amount likely does not represent the full cost needed to adequately lower the interest rate as intended by the borrower.
C) $6,400
This option correctly reflects the amount the borrower will pay in discount points. It is calculated based on the percentage of the loan amount, aligning with industry standards for discount points, thus making it the accurate choice.
D) $8,000
This choice is incorrect as it overestimates the discount points the borrower must pay. At this level, the cost would be excessive for typical loan arrangements, indicating a misunderstanding of how discount points are generally structured.
Conclusion
The correct answer of $6,400 is justified based on standard calculations of discount points, which are designed to facilitate lower interest rates on loans. All other options fail to accurately represent the expected financial outlay for discount points in this context, making them incorrect.