Max paid $15,000 and borrowed $90,000 for an investment worth $105,000.What was the loan-to-value ratio?

Question

Quizplus · Accepted Answer

Loan-to-value ratio is calculated by dividing the loan amount by the appraised value or purchase price of the investment property, whichever is less. In this case, the appraised value is $105,000, and Max paid $15,000, so the loan is $90,000. Therefore, the loan-to-value ratio is (loan amount ÷ appraised value) × 100, which is (90,000 ÷ 105,000) × 100 = 85.71%. Rounded to the nearest whole number, the loan-to-value ratio is 86%. Therefore, the correct answer is C.

Max Paid $15,000 and Borrowed $90,000 for an Investment Worth