Mortgage A has an annual interest rate of 6 Mortgage B has a

Mortgage A has an annual interest rate of 6%. Mortgage B has an annual interst rate of 5%. All else equal, which of the following is true? a. You should choose Mortgage A because it will have the higher payment. b. You should choose Mortgage A because it will have the lower payment. c. You should choose Mortgage B because it will have the higher payment. d. You should choose Mortage B because it will have the lower payment.

Solution

Option D is correct.

You should choose Mortgage B because it will have the lower payment due to lower annual interest of 5% in comparison to interest rate of 6% for Mortgage A.