This year a single person pays $4,000 in state income taxes and gives another $1,000 to charity. Assume that, if the decision to buy a home is made, the property taxes would be $4,000 per year. Assume also that current mortgage loans are issued at 4% fixed for 30 years. To completely use up the (federal) standard deduction of $12,000, this individual would need to borrow a minimum of $..................... to buy a home. Making the further assumption that the home loan would require 5% down, the implied minimum (target) home price would be $....................

A. $75,000 loan to buy a home; target home price of $78,947

B. $75,000 loan to buy a home; target home price of $71,250

C. $125,000 loan to buy a home; target home price of $131,600

D. $125,000 loan to buy a home; target home price of $118,750