Morteza took out a loan from a bank at a 12% APR to buy a house. The loan required him to make monthly payments over a 3-year period. After paying for 24 months (2 years), Morteza sold the house to Negin. Negin then restructured the remaining loan balance into a new monthly repayment plan spread over 2 years. However, 1 year after purchasing the house, Negin decided to pay off the entire remaining loan amount, which was $100,000, thereby gaining full ownership of the house. Determine the original price of the house.

Morteza took out a loan from a bank at a 12% APR to buy a house. The loan required him to make monthly payments over a 3-year period. After paying for 24 months (2 years), Morteza sold the house to Negin. Negin then restructured the remaining loan balance into a new monthly repayment plan spread over 2 years. However, 1 year after purchasing the house, Negin decided to pay off the entire remaining loan amount, which was $100,000, thereby gaining full ownership of the house. Determine the original price of the house.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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