Arizona Real Estate License Practice Exam

To determine how much Ben will pay in interests by the end of the first year, it's essential to first calculate the amount he will finance after making the down payment.

Ben's purchase price is $200,000, and he is making a down payment of 20%. The down payment can be calculated as follows:

Down payment = 20% of $200,000 = 0.20 × $200,000 = $40,000.

Now, to find out how much Ben will need to borrow (the loan amount), we can subtract the down payment from the purchase price:

Loan amount = Purchase price - Down payment = $200,000 - $40,000 = $160,000.

Next, we need to calculate the interest on this loan amount for the first year. The interest can be calculated using the formula:

Interest = Principal (loan amount) × Interest rate.

Here, the principal is $160,000, and the interest rate is 6%.

Interest = $160,000 × 0.06 = $9,600.

Thus, at the end of the first year, Ben will pay $9,600 in interest. This figure illustrates how interest is calculated on the principal balance of a loan, and