A lender agreed to loan 75% of the value of a property. The current interest paid is $650 monthly at a rate of 8 1/2%. What is the value of the property?

A lender agreed to loan 75% of the value of a property. The current interest paid is $650 monthly at a rate of 8 1/2%. What is the value of the property?

• A. $68,824
• B. $88,400
• C. $91,765
• D. $122,353

Answer: (D)

To determine the value of the property based on the provided information, we start by analyzing the loan agreement of 75% of the property's value and the monthly interest payment of $650. First, we recognize that the monthly interest payment can be calculated using the loan amount and the interest rate. The formula for monthly interest is: Monthly Interest = (Loan Amount) × (Annual Interest Rate / 12) In this case, the annual interest rate is 8.5%, or 0.085 when expressed as a decimal. To convert this to a monthly interest rate, we divide by 12: 0.085 / 12 = 0.00708333 (approximately). Next, we set up the equation using the known monthly payment of $650: $650 = (Loan Amount) × 0.00708333. Rearranging this gives us the loan amount: Loan Amount = $650 / 0.00708333 ≈ $91,765. Since the lender is willing to loan 75% of the property's value, we can find the total value of the property by setting up the following equation: Loan Amount = 75% of Property Value, so, Property Value = Loan Amount / 0

To determine the value of the property based on the provided information, we start by analyzing the loan agreement of 75% of the property's value and the monthly interest payment of $650.

First, we recognize that the monthly interest payment can be calculated using the loan amount and the interest rate. The formula for monthly interest is:

Monthly Interest = (Loan Amount) × (Annual Interest Rate / 12)

In this case, the annual interest rate is 8.5%, or 0.085 when expressed as a decimal.

To convert this to a monthly interest rate, we divide by 12:

0.085 / 12 = 0.00708333 (approximately).

Next, we set up the equation using the known monthly payment of $650:

$650 = (Loan Amount) × 0.00708333.

Rearranging this gives us the loan amount:

Loan Amount = $650 / 0.00708333 ≈ $91,765.

Since the lender is willing to loan 75% of the property's value, we can find the total value of the property by setting up the following equation:

Loan Amount = 75% of Property Value,

so,

Property Value = Loan Amount / 0