Final answer:
To calculate the cash payment for points on a loan, multiply the loan amount by the percent of points. For a $60,000 loan with 2.5 points, the man would have to pay $1,500 in cash.
Step-by-step explanation:
If a man had a loan for $60,000 and he had to pay 2.5 points, to find out how much he would have to pay in cash for the points, we need to calculate 2.5% of $60,000. Points are essentially prepaid interest on a loan, and one point is equal to 1% of the loan amount.
To calculate the cash payment for the points, we use the following equation:
Cash Payment = Loan Amount x Points %
Cash Payment = $60,000 x 2.5% = $60,000 x 0.025
Cash Payment = $1,500
Therefore, the man would have to pay $1,500 in cash for the 2.5 points on his $60,000 loan.