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A building was purchased for $850,000, with 10% down and a loan for the balance. if the lender charged the buyer two discount points, how much cash did the buyer need at closing if the buyer incurred no other costs?

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Answer:

$100,300

Explanation:

Since the building value = $850,000

And, 10% made the down payment

That means down payment would be

= $850,000 × 10%

= $85,000

So, Loan balance would be

= $850,000 - $85,000

= $765,000

As we know that 1 point is equal to 1%

So, For two points, it would be 2%

= $765,000 × 2%

= $15,300

The cash would be

= $85,000 + $15,300

= $100,300

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