The following excerpt is from a letter sent to a financial advice columnist: "My wife and I are trying to decide how to invest a $250,000 windfall. She wants to pay off our $114,000 mortgage, but I'm not eager to do that because we refinanced only nine months ago, paying $3,000 in fees and costs." Source: Liz Pulliam, Los Angeles Times advice column, March 24, 2004. How should the $3,000 in fees and costs be considered? OA. It is a sunk cost and should be taken into account when deciding to pay off the mortgage. OB. It should be taken into consideration in the decision as to whether or not to pay off the mortgage. OC. It is an explicit cost of paying off the mortgage. OD. It is a sunk cost and should not be taken into account when deciding to pay off the mortgage.

The following excerpt is from a letter sent to a financial advice columnist: "My wife and I are trying to decide how to invest a $250,000 windfall. She wants to pay off our $114,000 mortgage, but I'm not eager to do that because we refinanced only nine months ago, paying $3,000 in fees and costs." Source: Liz Pulliam, Los Angeles Times advice column, March 24, 2004. How should the $3,000 in fees and costs be considered? OA. It is a sunk cost and should be taken into account when deciding to pay off the mortgage. OB. It should be taken into consideration in the decision as to whether or not to pay off the mortgage. OC. It is an explicit cost of paying off the mortgage. OD. It is a sunk cost and should not be taken into account when deciding to pay off the mortgage.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter14: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 4CQ

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