Ch 8 Pearson VUE - Real Estate Math Calculations. Multiple Choice Questions And Correct Answers

Ch 8 Pearson VUE - Real Estate Math Calculations. Multiple Choice Questions And Correct Answers I. An office manager was paid $1,000 per month plus 0.0025% (1/4) of one percent of all office sales. In November, she received $2,780. This amount was based on monthly sales of A. $556,000. B. $712,000. C. $912,000. D. $1,112,000. B $2,780 - $1,000 (salary) = $1,780 attributable to sales $1,780 / 0.0025% = $712,000 total office sales 2. What investment is necessary for a yield of $500 per month at 6 percent interest? A. $8,333.33 B. $60,000 C. $100,000 D. $120,000 C $500 per month = $6,000 per year $6,000 / 0.06% = $100,000 = $100,000 investment yielding $6,000 per year at 6% 3. A 30-acre rectangular parcel has 660 feet on the street side. What is the depth of the parcel in feet? A. 738.42 B. 963.7 C. 1,240 D. 1,980 D Known dimension = 660 ft. TOTAL area is 30 acres, or 30 x 43,560 = 1,306,800 sq ft. To find one dimension of a rectangle when total area and other dimension are known, divide the known dimensions into the total area. 4. A list price was set to leave the owner with $90,000 after a 6 percent commission was deducted from the sales price. What was the list price? A. $95,400 B. $95,745 C. $95,905 D. $96,000 B $90,000 is left after 6% of the sale is taken out so 94% of the list price is $90,000 5. Which is the correct formula to determine the interest rate? A. Interest rate = Interest earned / Principal B. Interest rate = Interest earned x Principal x Time C. Interest rate = Interest earned / Time D. Interest rate= Interest earned x Time A The rate is the part divided by the whole. 6. The next monthly interest payment on a loan balance of$17,835 is $132.28. The interest rate on the loan is A. 6.78%. B. 7.4%. C. 8.9%. D. 13.48%. C Monthly interest of $132.28 x 12 = yearly interest of $1,587.36 interest earned (part) / principal (whole) = rate $1,587.36 / $17,835 = 0.089, or 8.9% 7. On a 70-foot-by-70-foot rectangular lot, the side yard building setbacks are 10 feet. The front yard setback is 25 feet, and the rear set back is 20 feet. What is the maximum square footage possible for a one-story structure? A. 1,000 B. 1,200 C. 1,250 D. 4,900 C Building maximum width is 50 feet because there are 10-ft setbacks on each side. Maximum depth is 25 ft because front yard and rear yard setbacks total 45 ft (70 ft - 45 ft). Multiply width (50 ft) by depth (25 ft) to find square footage 8. J purchased 4 lots at $12,000 each and divided them into 6 lots that were sold for $9,600 each. What was J's percentage of profit based on his cost? A. 6% B. 12% C. 20% D. 24% C Four lots at $12,000 each = $48,000 cost 6 lots at $9,600 each = $57,600 selling price $57,600 - $48,000 = $9,600 profit. To find percentage, divide the net by the cost: $9,600 (net) / $48,000 (cost) = 0.02, of 20% 9. K purchased a property for $175,000. K wishes to sell the property. If the total selling costs will equal 11 percent of the sales price, how much will the property have to appreciate in value for K to break even? A. $19,612 B. $20,311 C. $21,629 D. $23,730 C To break even, the sales price must be $175,000 plus 11% of the sales price, so $175,000 = 89% of the sales price $175,000 (part) / 0.89 (rate) = $196,629 Sales price $196,629. But the question asks for appreciation, so $196,629 - $175,000 = $21,629 10. A mill would be expressed as A. $0.001 B. $0.01 C. $0.1 D. $1.0 A A mill is a tenth of a cent, and a cent is 0.01 11. A house purchased four years ago for $50,000 has increased in value by 10 percent each year since purchase. The house is now worth A. $66,550. B. $70,000. C. $73,205. D. $90,000. C The house has appreciated in value by 10% each year. $50,000 + 10% = $55,000 value at the end of the first year $55,000 + 10% = $60,500 value at the end of the second year $60,500 + 10%= $66,550 value at the end of the third year $66,550 + 10%= $73,205 value at the end of the fourth year 12. Builder J received a bridge loan for $72,500 at 12 percent interest. If his total interest costs were $5,075, how many months did it take J to pay off the loan? A. 4 months B. 6 months C. 7 months D. 8 months C $72,500 X 0.12 $8,700 per year $8,700 / 12= $725 interest cost per month $5,075 / $725= 7 months 13. A property with a gross annual income of $20,000 has a value of$120,000.The only expense is the 11 percent interest payment on a $100,000 straight mortgage. What is the owner's percentage return on equity? A. 16.6% B. 20% C. 22.2% D. 45% D Gross= $20,000 Expenses= 11% of $100,000 or $11,000. Net is $20,000 - $11,000= $9,000 Equity is the difference between value ($120,000) and the mortgage ($100,000) or $20,000 14. A one-acre site has a 40' x 100' rectangular building. The building occupies what percent age of the site? A. 0.025% B. 2.5% C. 9.2% D. 11.1% C 40 ft x 100 ft= 4000 square feet, 1 acre= 43,560 square feet 40,000 / 43,560= 0.092 or 9.2% 15. D sold a note to E at a 32 percent discount. D received $5,304. What was the amount due on the note? A. $1,697 B. $6,800 C. $7,420 D. $7,800 D The note sold at 32% discount so it was sold at 68% of the amount due $5,304 / 0.68= $7,800 16. A 50-acre rectangular industrial site fronting on a highway is 1,000 feet deep. Assuming a sales price of $3,000 per acre, what is the price per front foot? A. $68.87 B. $74.93 C. $150.00 D. $3,443.52 A 50 acres= 43,560 x 50= 2,178,000 square feet To find the one dimension of a rectangle divide the total area by the known dimensions 2,178,000 / 1,000= 2,178 foot Frontage Sales price was 50 x $3,000 or $150,000. To find price per front foot divide cost ( $150,000) buy front footage (2178): $150,000 / 2178= $68.87 per front foot 17. A fully rented 10-unit apartment building has rents of $500 per unit per month. A 10 percent rent increase brings a 10 percent vacancy factor. The gross income