45. A buyer makes a 25% down payment on their home. They obtain a loan commitment for $240,000. The purchase price is:
Answer: C
The purchase price is $320,000.
To determine the purchase price of the home, we can use the loan amount and the down payment percentage. A 25% down payment means that the loan represents 75% of the total purchase price. Given that the loan amount is $240,000, the total purchase price can be calculated as $240,000 divided by 0.75, resulting in $320,000.
A) $265,000
This option is incorrect because if the purchase price were $265,000, the 25% down payment would amount to $66,250, leading to a loan amount of only $198,750. This is significantly less than the provided loan commitment of $240,000.
B) $300,000
This option does not hold because a purchase price of $300,000 would result in a 25% down payment of $75,000, which would leave a loan amount of $225,000. This amount exceeds the actual loan commitment of $240,000, making this option invalid.
C) $320,000
This option is correct. With a purchase price of $320,000, the 25% down payment would be $80,000, allowing for a loan amount of $240,000, which matches the loan commitment. This confirms that $320,000 is indeed the accurate purchase price.
D) $345,000
This option is incorrect as well. A purchase price of $345,000 would require a down payment of $86,250, resulting in a loan amount of $258,750. This amount exceeds the loan commitment of $240,000, making this option infeasible.
Conclusion
The correct purchase price of $320,000 aligns perfectly with the loan commitment of $240,000 when considering a 25% down payment. All other options fail because they result in loan amounts that either do not meet or exceed the actual loan commitment, thereby confirming that option C is the only viable answer.