CA Real Estate Real Estate Mathematics 2 — Questions and Answers
Question 1: Annual property taxes are $3,600. If closing occurs on April 1 (taxes paid in arrears), how much does the seller owe the buyer at closing for taxes?
- $900 (Correct answer)
- $1,800
- $2,700
- $3,600
Correct answer: $900
3 months (Jan–Mar) × $300/month = $900 owed to buyer for taxes accrued during seller's ownership.
Question 2: A monthly mortgage payment is $1,850. If the annual interest rate is 7% and the loan balance is $250,000, how much of the first payment goes toward interest?
- $1,458.33 (Correct answer)
- $1,750.00
- $1,291.67
- $1,166.67
Correct answer: $1,458.33
$250,000 × 0.07 ÷ 12 = $1,458.33 interest for the first month's payment.
Question 3: A property has a market value of $400,000 and an assessed value of 80% of market value. The tax rate is $1.25 per $100 of assessed value. What are the annual taxes?
- $4,000 (Correct answer)
- $5,000
- $6,000
- $3,200
Correct answer: $4,000
$400,000 × 0.80 = $320,000 assessed value; $320,000 ÷ 100 × $1.25 = $4,000.
Question 4: A salesperson earns 60% of the commission her broker receives. The broker receives 50% of the 6% total commission on a $500,000 sale. How much does the salesperson earn?
- $9,000 (Correct answer)
- $15,000
- $6,000
- $18,000
Correct answer: $9,000
$500,000 × 6% = $30,000 total; broker gets $15,000; salesperson gets 60% × $15,000 = $9,000.
Question 5: A rectangular building measures 40 feet by 60 feet. At $85 per square foot, what is the replacement cost?
- $102,000
- $204,000 (Correct answer)
- $255,000
- $179,000
Correct answer: $204,000
40 × 60 = 2,400 sq ft; 2,400 × $85 = $204,000.
Question 6: A loan of $180,000 has an LTV ratio of 80%. What is the purchase price of the property?
- $200,000
- $225,000 (Correct answer)
- $210,000
- $240,000
Correct answer: $225,000
Purchase price = Loan ÷ LTV = $180,000 ÷ 0.80 = $225,000.
CA Real Estate Real Estate Mathematics 2
Annual property taxes are $3,600.
If closing occurs on April 1 (taxes paid in arrears), how much does the seller owe the buyer at closing for taxes?