A home owner purchased a rural parcel and borrowed 60% of the price using an interest only loan. The loan has an interest rate of 10% and the total interest paid the first year is scheduled to be $5,400. What was the purchase price?

Question

Quizplus · Accepted Answer

Let P be the purchase price.
The amount borrowed is 0.6P.
The interest for the first year is 0.1(0.6P) = 0.06P.
We are given that 0.06P = $5,400, so P = $90,000.

A Home Owner Purchased a Rural Parcel and Borrowed 60