Question

financial scenario: evaluating home purchase financing options
scenario background:
linda is considering buying a house priced at $300,000 and is exploring different financing options. she wants to allocate her mortgage based on different portions of the loan at varying interest rates, which are offered as part of a blended - rate mortgage program.
mortgage financing options:

• mortgage total: $300,000
• portions and interest rates:
• portion a:
• amount: $100,000
• interest rate: 3.0% per annum
• portion b:
• amount: $150,000
• interest rate: 3.5% per annum
• portion c:

is the formula in cell c6 = d5 * 100 that calculates the overall weighted average interest rate, correct?
no, the correct formula is: = b5 / d5
yes, the correct formula is: = d5 * 100
no, it the correct formula is: = d5
no, the correct formula is: = d5 / b5

Explanation:

The formula \(C6 = D5*100\) is incorrect. The weighted - average interest rate is calculated as a proportion of each loan portion's interest rate relative to the total loan amount. The formula \(=B5/D5\) would give the proportion of one loan portion (assuming \(B5\) is the interest - related value of a portion and \(D5\) is the total loan amount). For example, if \(B5\) is the interest amount of a portion and \(D5\) is the total loan, \(B5/D5\) gives the rate for that portion relative to the whole.

Answer:

No, the correct formula is: \(= B5/D5\)