Question

1. The value of a property is $111,000 today. What was the original cost if the property has lost 45% of its value over the past seven years?

2. If the bank makes a 90% loan on a house values at 178,500, how much additional cash is required as a down payment if the buyer has already paid $5,400 in earnest money?

3. A gift shop pays rent of $700 per month plus 2.8% of gross annual sales in excess of $50,000. What was the average monthly rent last year if gross annual sales were $75,000? Round your answer to the nearest cent

Answer 1

1) Present value = Original value -(45% x original value)
=111000 = Original value -0.45Original value
=111000 = 0.55Original value
Original value = 111000/0.55
=201818.18$

2) Down payment = Value of home(1-Loan %)

= 178500(1-90%)

=178500(0.1)

=17850 $

Amount already paid = $5400

Thus additinal amount required = 17850-5400 = 12450$

3) Variable portion rof rent = 2.8% x (Actual sales - 50,000)

=2.8% x (75000-50000)

=2.8%x 25000

=700 $ per year

Thus per month rent = 700/12 = 58.33 $

Thus average monthly rent = 700 + 58.33 = 758.33$