Question 50

4 discount points have to be paid.

To determine the number of discount points paid, divide the total dollar amount of the discount points by the mortgage amount, and then multiply by 100. In this case, $3,200 divided by $80,000 equals 0.04, which corresponds to 4 discount points.

A) 3

Option A is incorrect because 3 discount points would only account for $2,400 when calculated on an $80,000 mortgage ($80,000 x 0.03), which does not match the $3,200 amount specified in the question.

B) 4

Option B is correct as it accurately reflects the calculation of discount points. By dividing $3,200 by $80,000 and converting the result to a percentage, we find that 4 points have been paid (0.04 x 100 = 4).

C) 5

Option C is incorrect because 5 discount points would represent $4,000 in discount points on an $80,000 mortgage ($80,000 x 0.05), which exceeds the specified amount of $3,200 that the borrower is required to pay.

D) 6

Option D is also incorrect as 6 discount points would amount to $4,800 on the $80,000 mortgage ($80,000 x 0.06), which is not consistent with the $3,200 payment stated in the question.

Conclusion

The calculation confirms that paying 4 discount points results in the correct total of $3,200 for the mortgage of $80,000. Options A, C, and D do not align with the given amount, making them incorrect. Thus, Option B stands as the only correct response reflecting the terms of the mortgage.