Cash Equivalency

A single family residence sold for $110,000 with a down payment of $25,000.  The seller took back a PMM of $85,000 for 25 years at 10% interest.  The market rate was 13%.  What is the cash equivalent sale price?

Answer #10:

Monthly payment @10% is $85,000 x  0.00908701 (from column 6) = $772.40

Present value of $772.40 for 25 years @13% is $772.40 x 88.665428 = $68,485 (present value of the loan)

The cash equivalent sale price of the house is $68,485 + $25,000 = $93,485