Sam Jones has an engineering firm. He wants to build a new headquarters building. The building will cost $1,500,000. He will put down $450,000 and have a bank finance the remainder at prime plus 2 percent. The prime lending rate is currently 8.5 percent. Sam will withdraw the money for the down payment from his mutual fund account where he has earned 13 percent for the last ten years. What percentage of the building is being financed by the bank?

Question

Quizplus · Accepted Answer

The bank is financing $1,050,000 of the $1,500,000 total cost (since Sam is putting down $450,000), which is 70% of the total cost.

Sam Jones Has an Engineering Firm