Topic 11

Question 1

The area of a square or rectangle is:

Answer 1

Length X Width = Area

L X W = A

Question 2

The area of a triangle is:

Answer 2

base X height divided by 2

B X H = A/
2

Question 3

Area is expressed in ___

Answer 3

square feet.

Question 4

Volume equals:

Answer 4

length x width x height

L x W x H

Question 5

For commission problems use the “T” formula:

Answer 5

Small # / % Big #

The horizontal line in the formula means “divide”, and the vertical line means “mulitply”

Question 6

For mortgage problems, the big number is the ____,

the small number is the _____,

and the % is the _____.

Answer 6

mortgage balance

yearly interest paid on the mortgage

interest rate on the loan

Question 7

Mortgages are always based on either the selling price or the appraised value, whichever is ____

Answer 7

less

Question 8

Amortization tables are used to find the monthly payment including principle and interest for a given loan amount at a given interest rate for a given term (number of years of loan). This amount is sometimes referred to as the ____

Answer 8

factor from the amortization table

Question 9

To find the monthly payment…

Answer 9

multiply the factor times the number of thousands of the loan amount

Question 10

When buying or selling a house, at the closing the taxes are ____ so that the buyer and seller each pay their share for the part of the year that they own the house.

Answer 10

prorated

Question 11

Proration may be based either on a ___ or a ____

Answer 11

360 day year (30 days in every month), or a 365 day year

Question 12

When using a 360 day year you can …

Answer 12

just find the cost per month then multiply times the total number of months.

Question 13

When using a 365 day year, you must …

Answer 13

find the cost per day, then figure the total number of days and multiply the daily cost by the number of total days.

Question 14

To find the amount owed by the buyer or seller, …

Answer 14

divide the amount for taxes by twelve to get a monthly cost, or by 365 to get a daily cost. Then multiply that number by the appropriate number of months or days to find the amount owed.

Question 15

The formula for taxes is:

Answer 15

Tax = Tax Rate X # of 1000’s of assessed value

Question 16

The tax rate is usually expressed in ___

Answer 16

mills and may be called the millage rate.

A mill is one thousandth of a dollar, that is, one penny equals 10 mills.

Question 17

paid to get a lower interest rate on a loan. paid at the closing, and are always figured on the loan amount, NOT the selling price. Each is figured as 1% of the loan amount. may be paid by either the buyer or the seller.

Answer 17

discount points

Question 18

used to calculate capitalization rates and value. This formula is used for investment property. Works exactly like the T formula.

Answer 18

The IRV formula

I /RV

I = net yearly income
R = capitalization rate, or rate of return
V = value

Question 19

The net income is determined by ____. Monthly debt service (mortgage payment) is NOT considered an expense in this type of problem.

Answer 19

subtracting the yearly expenses for the property from the gross yearly rents.

Question 20

a number which, when multiplied by the rent for a property, will give the value of the property.

Answer 20

gross rent multiplier or
gross income multiplier

Found by dividing the market value by the rent for several properties in a given area and taking the average of the values found. This number may then be applied to other similar properties to determine value.