I agree with the given answer because of the gain or loss on retirement of bonds = book value of bonds - the amount paid to the bondholders
As given,
Loan amount is = $45000
Rate of interest = 8.5%
So, Tony's mortgage will attract an interest of:
= $3825 (this is yearly)
And for 1st month it will be =
= $318.75
As given, the first month's payment is $390.60 and this covers the interest Additional amount ($390.60 - $318.75 = $71.85) is a payment against the principle.
Hence, the new principle after the 1st month is $71.85 less than $45000
= 45000-71.85 = $44928.15
Hence, the last option $44928.15 is the correct answer.
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Let X be the original price.
Do a 40% increase we get the price: X+0.4X=1.4X
Doing a 25% off we get the new price:
(1.4X)-0.25(1.4X)=1.05X
=X+0.05X.
The new prices are 5% increase from the original price.