Question

Julio just bought a $267,900 house. He had a 20 year mortgage with a fixed rate of 5.875%. Julio's monthly payments are $1558.09. What percent of the purchase price was Julio's down payment?

Answer 1

Answer: c

Explanation:

Answer 2

First find the present value using the formula of the present value of an annuity ordinary.
The formula is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
Pv present value?
PMT monthly payment 1558.09
R interest rate 0.05875
K compounded monthly 12 because the payment is monthly
N time 20 years
Pv=1,558.09×((1−(1+0.05875
÷12)^(−12×20))÷(0.05875÷12))
=219,684.92

Subtract the amount of the present value from the purchase price of the house to get the amount of the down payment
267,900−219,684.92=48,215.08

So the percent of the purchase price was Julio's down payment is
48,215.08÷267,900
=0.17997×100=17.997% round your answer to get 18%