David Saks

A fire insurance policy was taken out by a seller for three years dated June 1, 2005.

The premium for three years was $3600.

The property was sold on January 1, 2007.

When the premium is prorated how much would be charged to the buyer ?

Take your time. The answer is below the wildlife photo.

A. $1700

June 1, 2005 to June 1, 2008 equals 36 months.

June 1, 2005 to January 1, 2007 equals 19 months used on the policy.

Subtract 19 from 36 months and the buyer has 17 months remaining on the policy.

Divide 36 in 3600 and the polocy is 100 a month.

                                Multiply the remaining months times 100 and we get $1700.

$25,000 is 5% of what amount ?

The answers are below the wildlife photos. Take your time.

A. $500,000

Always divide the percentage rate into the known amount to get your answer with this type of problem.

$25,000 divided by 5% or .95 equals 500,000.

You'll find problems like this on the exams which examine commission, sale and listing price, and other finance issues.

$15,000 is 2.5% of what amount ?

Hint: divide

Take your time. The answer is posted below the wildlife photo.

A. $600,000

Convert 2.5% into a decimal, .025.

Next, divide .025 into 15,000 and you get 600,000.

Always remember to divide the fraction into the remainder to get the original amount. 

You'll find problems on the real estate exams which use examples like this to compute the original sales price of a property after the commission has been settled.

Buyer signed a real estate contract and was able to arrange seller financing with no interest !

The amount of the loan was $216,000 payable in monthly installments of $4500 a month.

Since the payments don't include any interest, and assuming that the first payment is to be made on January 1, 2009, and that payments are to made on the first day of each month, what is the date that the last payment will become due ?

Take your time. The answer is posted below the wildlife photo.

A. December 1, 2012.

Divide the monthly payments of $4500 into the loan amount of $216,000 and we see that we have 48 payments.

January 1, 2009 to December 1, 2012 equals 48 months.

Here's an easy on efor you to consider.

What would three month's interest be on a $59,500 loan be with a 7& annual interest rate ?

Take your time. The answer is posted below the wildlife photo.

A. $1041.25

Multiply the interest rate of 7% or .07 times times $59,500.

We find that the total annual interest on the loan would amount to $4165.

Divide 4165 by twelve months.

That leaves us with $347.083333.

Multpiply $347.083333 times three months.

Now we have our answer, $1041.249999 or rounded $1041.25.

The value of a home was estimated to be $144,000 at the end of eight years.

How much did the home cost new if the yearly rate of depreciation was 2.5% ?

Take your times. The answer is below the wildlife scene.

A. $180,000

Multiply 8 years times .025 (2.5%) and we get .2 or 20% depreciation over 8 years.

Subtract 20% from 100% value or .2 from 1 and we now have .8 or 80% of value remaining after depreciation.

Now divide .8 into the estimated value after eight years of 144,000 and we find that the cost of the house new was $180,000.

No monkeyin' around !

A lot measuring 100 feet by 100 feet was assessed at 150 dollars a front foot by the county, and the home was assessed at $32,000.

What was the tax total for the year if the tax rate is 40 mills with no equalization factor ?

The answer is below the wildlife scene. Take your time.

A. $1880

Let's find out how much is assessed per front foot by multiplying 100 feet times the assessed amount of 150 dollars, and we get $15,000.

Add the homes assessment of $32,000 to the $15,000 to get a total assessed value of $47,000.

Multiply .04 (40 mills) times the total assessed value of $47,000 to get a total tax amount due on the property for the year of  $1880.

Mr. Dusclima rents a retail space from Mr. Graticha with a percentage lease.

The lease will call for a minimum monthly rent of $3000 and 5% of any gross yearly business in excess of $800,000.

How much rent will Mr. Graticha receive this year from Mr. Dusclima if Mr. Dusclima does a gross business of $1,400,000 ?

The answer is below the wildlife photo. Take your time.

A. $66,000

Multiply $3000 times twelve to get the annual rent of $36,000.

Subtract 800,000 from 1,400,000 to get the gross business over 800k which is 600,000 dollars.

Multiply .05 or 5% times 600,000 to get the percentage Mr. Graticha will receive from the additional amount over the gross and we find that the amount will be $30,000.

Add the percentage of the gross, $30,000, to the annual rent, $36,000, and we see that the first years rent due the percentage lease will amount to $66,000.

Mr. Fumbistulamo has a mortgage for $600,000.

He's got a great interest rate, 5% apr.

His monthly payment is 6000 dollars covering the interest, and what's left over is applied to the principal balance of the mortgage..

What is the principal balance after making his first payment ?

The answer is below the wildlife photo. Please take your time.

A. $596,500

Let's find out what the interest on 600,000 is at 5% by multiplying .05 times 600,000, and we get 30,000 dollars.

Divide 12 (months) into 30,000 and we get the first months interest total of $2500.

Add 2500 to the loan total of 600,000 and we now have 602,500 dollars.

Now subtract the first payment of 6000 dollars from the principal balance plus interest of 602,500 and that leaves us with a new principal balance of $596,500.

If an apartment building, which cost $2,100,000, has an income of $14,000 per month, what is the annual rate of return on the building's investment ?

The answer is below the wildlife photo. Please take your time.

A. .08 or 8%

Multiply the monthly income times twelve (the annual rate) to get an annual income of $168,000 from the building.

Divide 2,100,000 into 168,000 to get the rate of return which is .08 or 8%.