Cash Equivalency - Need help from someone who understands!

[Ethan S.]

SO.. I'm in this real estate investing class and have an exam tomorrow. This question below is a practice problem for the exam. I need some help please. I have the answer but I've spent the past hour trying to figure this thing out. 

Questions #3:

You are looking at purchasing a small industrial building the building currently is offered for sale at $1,875,000 with special financing arranged by the seller. The seller is offering the property at 5.5% amortized over 15 years assuming a down payment of 20% is included up front. A balloon payment will be required in 5 years. Assuming you go to the bank and take out a mortgage with same terms (expect the banks interest rate is 7%), what should you be willing to pay for the property?

 THE ANSWER IS $1,790,604.

Thank you!