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Kate and Bill secured a loan with a 75% loan-to-value ratio. The interest rate was 7.125% and the term was for 30 years. The first month's interest payment was $477.82. What was the appraised value of the property?a) $103,700b) $80,475c) $107,300d) $79,239

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luisejr77

Answer: Option c.

Step-by-step explanation:

We know that the first month's interest payment was $477.82, therefore, we can calculate the Annual interest multiplying this first month's interest payment by 12:

[tex]Annual\ interest=\$477.82*12\\\\Annual\ interest=\$5,733.84[/tex]

Dividing it by the interest rate (Remember that [tex]7.125\%=\frac{7.125\%}{100}=0.07125[/tex]), we get:

[tex]\frac{\$5,733.84}{0.07125}=\$80,474.94[/tex]

Finally, since Kate and Bill secured a loan with a 75% loan-to-value ratio, we get:

[tex]\frac{\$80,474.94}{0.75}=\$107,299.92 \approx\$107,300[/tex]