A House Sells for $102,000 and Is Appraised at $100,000

question 54

Multiple Choice

A house sells for $102,000 and is appraised at $100,000 by a lender who is willing to make a 75% loan-to-value loan. How much down payment will this house require?

• A) $25,500
• B) $27,000
• C) $75,000
• D) $76,500

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Definitions:

Time Value of Money

The principle that a dollar received today is worth more than a dollar received in the future, due to its potential earning capacity.

Hurdle Rate

The minimum acceptable rate of return on an investment that a manager or investor expects to achieve.

Time Value of Money

The idea that having money in the present is more valuable than having the same sum in the future because of what it could potentially earn.