36. The terms of a mortgage call for a borrower to pay $3,200 in loan discount points. If the mortgage is $80,000, how many discount points have to be paid?
Answer: B
4 discount points have to be paid.
To determine the number of discount points to be paid, we can use the formula that defines discount points as a percentage of the mortgage amount. In this case, $3,200 represents 4% of the $80,000 mortgage, which translates to 4 discount points.
A) 3
Option A is incorrect because 3 discount points would equal $2,400 (3% of $80,000), which does not match the $3,200 payment required. This amount does not satisfy the conditions set in the question.
B) 4
Option B is correct as 4 discount points equal $3,200 (4% of $80,000). This calculation aligns perfectly with the terms of the mortgage, confirming that the borrower must pay 4 discount points.
C) 5
Option C is incorrect because 5 discount points would amount to $4,000 (5% of $80,000), exceeding the $3,200 payment stated in the question. Therefore, this option does not fit the required terms.
D) 6
Option D is also incorrect since 6 discount points would result in a payment of $4,800 (6% of $80,000), which is significantly higher than the $3,200 required. This option fails to meet the conditions outlined in the question.
Conclusion
The calculation shows that the correct number of discount points is 4, corresponding to the $3,200 payment required for an $80,000 mortgage. All other options do not align with the provided payment amount, making them incorrect. Thus, option B stands out as the definitive correct choice.