Answer: 4.0%

Use the level-payment mortgage formula: \[ PMT = PV \cdot \frac{r}{1-(1+r)^{-n}} \] where: - \(PV = 100{,}000\) - \(PMT = 740\) - \(n = 15 \times 12 = 180\) - \(r\) is the monthly yield. Solving for \(r\) gives a monthly rate of about **0.333%**, which annualizes to about **4.0% nominally compounded monthly**. So the closest answer is **A. 4.0%**.

Author: Manit Arora