46. 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 information regarding the down payment and the loan commitment. Since the buyer makes a 25% down payment, the loan amount of $240,000 represents 75% of the total purchase price.
A) $265,000
This option is incorrect because if the purchase price were $265,000, then the down payment would be 25% of that amount, which is $66,250. The remaining loan amount would be $198,750 (i.e., $265,000 - $66,250), which does not match the loan commitment of $240,000.
B) $300,000
This option is also incorrect. A purchase price of $300,000 would result in a down payment of $75,000 (25% of $300,000), leaving a loan amount of $225,000 (i.e., $300,000 - $75,000). This is higher than the stated loan commitment of $240,000.
C) $320,000
This is the correct option. If the purchase price is $320,000, the down payment would be $80,000 (25% of $320,000). Therefore, the loan amount would be $240,000 (i.e., $320,000 - $80,000), which exactly matches the loan commitment.
D) $345,000
This option is incorrect as well. If the purchase price were $345,000, the down payment would be $86,250 (25% of $345,000), resulting in a remaining loan amount of $258,750 (i.e., $345,000 - $86,250). This exceeds the loan commitment of $240,000.
Conclusion
The correct answer is $320,000, as it accurately reflects the relationship between the down payment and the loan commitment. All other options fail to align with the loan amount derived from the intended down payment percentage, demonstrating that they do not satisfy the conditions set by the question.