Chapter 10 Book Quiz

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What is the monthly net income on an investment of $115,000 if the rate of return is 12.5 percent? a. $1,150.00 c. $7,666.67 b. $1,197.92 d. $14,375.00

$1,197.92 Monthly Net Operating Income$115,000 x 12.5% = $14,375$14,375 Annual Net Operating Income / 12 Months = $1,197.92 Monthly Net Operating Income

What was the price per front foot for a 100' x 125' lot that sold for $125,000? a. $1,250 c. $556 b. $1,000 d. $10

$1,250 Per Front Foot$125,000 Sales Price / 100 Front Feet = $1,250 Per Front Foot

A salesperson sells a property for $58,500. The contract he has with his broker is 40 percent of the full commission earned. The commission due the broker is 6 percent. What is the sales-person's share of the commission? a. $2,106 c. $3,510 b. $1,404 d. $2,340

$1,404 Salesperson's Commission $58,500 x 6% = $3,510 $3,510 x 40% = $1,404 Salesperson's Commission

You attempt to appraise a 28-unit apartment house, employing the income approach. You discover that each unit rents for $775 a month, an amount that seems consistent with like rental units in the vicinity. For the past five years the annual expenses of operation have averaged $82,460. The complex has maintained a consistent vacancy rate of 5%. A potential investor is only interested if the return is 9.5% percent. What value would you arrive at using these variables? a. $2,741,100 c. $1,736,000 b. $868,000 d. $1,873,000

$1,736,000 Value$775 Monthly Rent x 28 Units x 12 Months =$260,400 Annual Scheduled Gross Income$260,400 Annual Scheduled Gross Income - 5% Vacancy Rate = $247,380 Annual Effective Gross Income$247,380 Annual Effective Gross Income - $82,460 Annual Expenses = $164,920 Annual Net Operating Income$164,920 / 9.5% = $1,736,000 Value

What would you pay for a building producing $11,250 annual net income and showing a minimum rate of return of 9 percent? a. $125,000 c. $101,250 b. $123,626 d. $122,625

$125,000 Price$11,250 / 9% = $125,000 Price

How much interest will the seller owe the buyer for a closing date of August 10 if the outstanding loan balance is $43,580? The interest rate on this assumable loan is 10.5 percent and the last payment was paid on August 1. Prorations are to be done through the day of closing and using a statutory year. a. $127.11 c. $125.37 b. $254.22 d. $381.33

$127.11 Interest DueSeller owes Buyer 10 days (August 1 through August 10)$43,580 x 10.5% = $4,575.90$4,575.90 Annual Interest / 360 Days = $12.71083 per Day x 10 Days = $127.11 Interest Due

The value of your house, not including the lot, is $91,000 today. What was the original cost if it had depreciated 5 percent per year for the past seven years? a. $67,407.41 c. $122,850.00 b. $95,789.47 d. $140,000.00

$140,000.00 Original Cost5% depreciation per Year x 7 years = 35% Total Depreciation100% Original Cost - 35% Total Depreciation = 65% Today's Value $91,000 Today's Value / 65% = $140,000

The sale of Mrs. Gates' home is to close on September 28. Included in the sale is a garage apartment that is rented to Sandy Dart for $350 per month. Sandy has paid the September rent. What is the rent proration, using actual days and prorating through the day of closing? a. $325.67 c. $350.00 b. $23.33 d. $175.00

$23.33 Rent Proration30 Days in September - 28 Day of Closing = 2 Days Due$350 Monthly Rent / 30 Days = $11.666667 per Day x 2 Days = $23.33 Rent

Calculate eight months' interest on a $5,000 interest-only loan at 9.5 percent. a. $475.00 c. $237.50 b. $316.67 d. $39.58

$316.67 Interest$5,000 x 9.5% = $475$475 Annual Interest / 12 Months x 8 Months = $316.67

If the savings and loan gives you a 90 percent loan on a house valued at $88,500, how much additional cash must your produce as a down payment if you have already paid $4,500 in earnest money? a. $3,500 c. $4,350 b. $4,000 d. $8,850

$4,350 Due at Closing100% Value - 90% LTV = 10% Down Payment$88,500 Value x 10% = $8,850 Down Payment$8,850 Down Payment - $4,500 Earnest Money = $4,350 Due at Closing

The buyer has agreed to pay $175,000 in sales price, 2.5 loan discount points and a 1 percent origination fee. If the buyer receives a 90 percent loan-to-value ratio, how much will the buyer owe at closing for points and the origination fee? a. $1,575.00 c. $5,512.50 b. $3,937.50 d. $6,125.00

$5,512.50 for Points and the Origination Fee2.5 Points Loan Discount + Point Origination Fee = 3.5 Points $175,000 x 90% = $157,500$157,500 x 3.5% = $5,512.50 for Points and Origination Fees

An owner agrees to list his property on the condition that he will receive at least $47,300 after paying a 5 percent broker's commission and paying $1,150 in closing costs. At what price must it sell? a. $48,450 c. $50,875 b. $50,815 d. $51,000

$51,000 Sales Price$47,300 Net to Seller + $1,150 Closing Costs = $48,450 Seller's Dollars after Commission100% Sales Price - 5% Commission = 95% Seller's Percent after Commission $48,450 / 95% = $51,000 Sales Price

The Loving Gift Shop pays rent of $600 per month plus 2.5 percent of gross annual sales in excess of $50,000. What was the average monthly rent last year if gross annual sales were $75,000? a. $1,125.00 c. $600.00 b. $756.25 d. $652.08

$652.08 Average Monthly Rent$75,000 Gross Annual Sales - $50,000 = $25,000 Gross Annual Sales Subject to 2.5%$625 Annual Percentage Rent / 12 Months = $52.08 Monthly Percentage Rent $600 Monthly Minimum Rent + $52.08 Monthly Percentage Rent =$652.08 Average Monthly Rent

Two brokers split the 6 percent commission on a $73,000 home. The selling salesperson, Joe, was paid 70 percent of his broker's share. The listing salesperson, Janice, was paid 30 percent of her broker's share. How much did Janice receive? a. $657 c. $1,533 b. $4,380 d. $1,314

$657 Commission to Janice$73,000 x 6% = $4,380$4,380 Full Commission / 2 Brokers = $2,190 Broker's Share of the Commission $2,190 x 30% = $657 Commission

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 c. $89,700 b. $88,100 d. $110,510

$88,100 Original Cost100% Original Cost + 12% Profit = 112% Sales Price $98,672 / 112% = $88,100 Original Cost

Find the number of square feet in a lot with a frontage of 75 feet, 6 inches, and a depth of 140 feet, 9 inches. a. 10,626.63 c. 216.25 b. 10,652.04 d. 25,510.81

10,626.63 Square Feet6" / 12 = 0.5' + 75' = 75.5' Frontage9" / 12 = 0.75' + 140' = 140.75' Depth 140.75' x 75.5' = 10,626.63 Square Feet

A 100-acre farm is divided into lots for homes. The streets require 1/8 of the whole farm, and there are 140 lots. How many square feet are in each lot? a. 43,560 c. 31,114 b. 35,004 d. 27,225

27,225 Square Feet per Lot1/8 = 1 divided by 8 = 0.125 for Streets100 Acres x 0.125 = 12.5 Acres for Streets100 Acres - 12.5 Acres for Streets = 87.5 Acres for Lots x 43,560 = 3,811,500 Square Feet / 140 Lots = 27,225 Square Feet per Lot

If your monthly rent is $525, what percent would this be of an annual income of $21,000? a. 25% c. 33% b. 30% d. 40%

30%$525 Monthly Rent x 12 months = $6,300 Annual Rent $6,300 / $21,000 = 30%


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