a bank gives a loan of 80% of the selling price with 8% of interest. The interest paid on the first month was $768. Calculate the selling price

Question

The answer is $144,000

Answer 1

Let the selling price = x

 

 

Therefore, we can use the following equation for interest to calculate this value.

 

Thus:

 

I = PRT = 768  where I = interest paid, R = rate of interest per year ( for one month, this is = 0.08/12),  T = 1 and P = 0.80x (remember that the money loaned is 80% of the selling price x). 80% = 0.80 and 8% = 0.08

 

Substituting these figures into the equation yields:

 

0.80x(0.08/12)(1) = 768

 

0.064x/12 = 768

 

x = 768/[(0.064/12)]  = 144,000

 

Therefore, the selling price is $144,000.