Henry agrees to pay four points on a loan of 82,500. How much are the points?

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Multiple Choice

Henry agrees to pay four points on a loan of 82,500. How much are the points?

Explanation:
One point equals 1% of the loan amount, and paying points means upfront interest to buy down the rate. Four points thus represent 4% of the loan. Calculate 4% of 82,500: 82,500 × 0.04 = 3,300. So the cost of the points is 3,300. This is why the amount aligns with four points on that loan.

One point equals 1% of the loan amount, and paying points means upfront interest to buy down the rate. Four points thus represent 4% of the loan. Calculate 4% of 82,500: 82,500 × 0.04 = 3,300. So the cost of the points is 3,300. This is why the amount aligns with four points on that loan.

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