Tommy's home is worth 25% more than he bought it for. He sells it and buys a new house that costs $500,000. If he had to take a loan for the 75% he can't pay, how much did he buy his first house for? Let's be accurate as possible.
He paid 25% of the new home price because 100 - 75 = 25. He paid $125,000 towards the new home because 500,000 x .25 = 125,000. Therefore he paid $100,000 for his first home because 125,000 / 1.25 = 100,000.
The answer: 100000.