Unit 13 Flashcards
Learning Objective: Calculate fractions, percentages, broker’s commission, and sales price.
Answer:
To calculate:
Fractions: Multiply the whole value by the fraction (e.g., $100 × ½ = $50).
Percentages: Multiply the value by the percentage as a decimal (e.g., $1,000 × 0.05 = $50).
Broker’s commission: Multiply the sales price by the commission rate (e.g., $200,000 × 6% = $12,000).
Sales price: Divide the commission by the commission rate (e.g., $12,000 ÷ 6% = $200,000).
Learning Objective: Compute profit and loss, simple interest, a tax rate and amount, an insurance premium, loan discount, and a loan amortization.
Answer:
To calculate:
Profit and loss:
Example:
(SellingPrice − Cost) ÷ Cost
Simple interest:
Example: $5,000 × 0.09 × 1 year = $450.
Tax rate and amount:
Example: $95,000 × $0.0171 = $1,624.50.
Insurance premium:
Based on specific insurance calculations provided by the provider; usually calculated per unit value.
Loan discount:
Example: $157,500 × 0.025 = $3,937.50.
Loan amortization:
MonthlyPayment = LoanAmount x R ÷ 1 - (1 + R) −n
Where R = monthly interest rate, and n = number of payments.
Learning Objective: Differentiate between the formulas for rectangles, cubes, and triangles; determine linear, area, and volume measurements; and calculate prorations.
Answer:
To calculate:
Rectangle area:
Area=Length×Width
Example: 15 ft × 40 ft = 600 ft².
Cube volume:
Volume=Length×Width×Height
Example: 10 ft × 10 ft × 10 ft = 1,000 ft³.
Triangle area:
Area = Base x Height ÷ 2
Example: (10 ft × 5 ft) ÷ 2 = 25 ft².
Linear measurement: Add all sides of a property (perimeter), e.g.,
2 × (Length + Width)
Prorations:
Proration = (AnnualAmount ÷ DaysinYear) × DaysOwed
Example: $1,282 ÷ 365 × 143 = $502.22.
Key Term: Amortization
Definition: The process of paying off a loan through scheduled, periodic payments that include both principal and interest.
Key Term: Area
Definition: The measure of a surface or piece of land expressed in square units.
Key Term: Interest
Definition: The cost of borrowing money, typically expressed as a percentage of the loan amount.
Key Term: Linear Measurement
Definition: The measurement of length in straight lines, often used for calculating fencing or other property boundaries.
Key Term: Loan Discount
Definition: Prepaid interest paid at the time of closing to reduce the interest rate on a loan.
Key Term: Loss
Definition: The negative financial result when expenses exceed income or the cost of an asset is greater than its sale price.
Key Term: Percent
Definition: A fraction or ratio expressed as a part of 100, used in calculating commissions, interest, and other real estate metrics.
Key Term: Profit
Definition: The positive financial result when income or sale price exceeds the cost of an asset or investment.
Key Term: Statutory Year
Definition: A year composed of 12 months, each with 30 days, totaling 360 days, used for prorations in some real estate calculations.
Key Term: Volume
Definition: The measure of space within a three-dimensional object, expressed in cubic units, used in calculations for material requirements like concrete.
If the bank gave John a 90% loan on a house valued at $88,500, how much additional cash must he produce as a down payment if he has already paid $4,500 in earnest money?
A. $3,500
B. $4,000
C. $4,350
D. $8,850
Answer: C. $4,350
Reasoning for the answer: The 10% down payment is $8,850, from which the $4,500 earnest money is subtracted, leaving $4,350 due at closing.
What did the owners originally pay for their home if they sold it for $98,672, which gave them a 12% profit over their original cost?
A. $86,830
B. $88,100
C. $89,700
D. $110,510
Answer: B. $88,100
Reasoning for the answer: The original cost is $98,672 ÷ 1.12, which equals $88,100.
