Unit Quiz Answer Key

Modern Real Estate Practice in North Carolina Ninth Edition Unit Quiz Answer Key Unit 1 3-d 4-c 5-d Unit 2 1-d 2-a 4-d 5-a 6-d 7-a 8-c 10-a 1 1 14-b 1 18-a 19-a 21-c Unit 3 2-d 4-c 5-a 10-c 11-d 7-d 8-a 2 24-d 25-d 26-b 2 2 2 30-b 3 3 33-a 34-b 35-b 36-d 37-c 3 39-b 40-d 41-c 4 43-d 44-c 14-c $135,000 MV 0.60 = $81,000 AV 0.0245 = $1,984.50 1 1 17-c 18-a 19-b 1 1 14-a 45-a 4 4 4 4 50-b 51-c 52-d 53-a 54-c 55-d 5 5 5 5 60-b 6 6 2 23-d $185,000 AV 1.10 EF = $203,500 0.04 = $8,140 24-c 2 2 27-c 2

Unit 4 1-c 72.5 100 = 7,250 SF per lot; 2 acres 43,560 SF = 87,120 SF 7,250 = 12 lots 3-d 4-a 5-a 4,800 SF 80 ft. deep = 60 front ft. $350 = $21,000 6-b Unit 5 3-d $357,800 500 = $715.60, round $716 4-b 10-d 1 14-c 1 17-a 1 Unit 6 2-d 3-a 4-b 9-a 10-d 1 1 20-c 2 23-d 24-c 25-a 2 27-c 2 2 30-b 31-c 32-d 33-d 34-a 35-b 3 37-d 13-b 14-a 17-d 18-a 19-b 20-a 21-d 2 23-a 24-c Modern Real Estate Practice in North Carolina Ninth Edition 8-c 10-a 175 685 = 119,875 SF 43,560 = 2.75 acres 160 acres 20 = 140 acres to buy $300 = $42,000 12-a 3 39-b 40-a 4 4 43-b 44-b 45-b 46-d 47-d 48-a 49-b 50-d 5 52-a 53-d $175,000 SP $500 = $350 25-b 2 27-a 28-c 2 30-c 31-d 32-a 33-a 34-b 35-d

Unit 7 3-a 4-c 6-b 80 $200 = $16,000 0.10 comm. = $1,600 gross comm. 0.60 = $960 8-a 9-b 10-d 14-b 15-a 16-b 17-c Unit 8 3-b 4-a $157,000 SP 0.06 = $9,420 gross comm. 0.10 = $942 5-a 6-b 9-a Unit 9 1-d 3-d 4-b 5-d 7-c Modern Real Estate Practice in North Carolina Ninth Edition 1 20-a $150,000 0.65 = $9,750 gross comm. 0.45 = $4,387.50 0.60 = $2,632.50 21-d 2 23-d 24-d 2 26-b 27-d 2 2 30-b 31-d 3 33-d 34-c 1 $50,000 net + $1,200 CC = $51,200 100% 7% = 93% $51,200 93% = $55,053.76 14-c 15-d 1 17-c $165,000 net 100% - 6 = 94% $165,000.94 = $175,532 1 14-c 35-a 36-b $95,900 SP 0.07 = $6,713 gross comm. 0.50 = $3,356.50 0.65 = $2,181.73 37-c 38-c 3 40-b 4 4 43-d 44-b 45-a 4 47-d 4 4 50-c 51-d 1 2 2 23-a 24-d 25-d 2 27-a 2 29-b 1 1 18-a 20-a 21-d

Unit 10 1-d 3-a 4-d 7-a Unit 11 2-d 3-a 4-c 5-a 7-d 8-c 11-d 12-d Unit 12 3-b 4-d 5-b 6-d 10-c 11-d 14-b 14-b 1 1 1 20-c 21-c 23-b 24-b 25-d 2 10-d 1 12-a 14-d 15-d 1 1 Modern Real Estate Practice in North Carolina Ninth Edition 17-d 18-c 2 23-a 27-d 2 29-b 30-a 3 3 3 34-a 35-a 36-b 37-d 1 $500 5 = $2,500; $650 8 = $5,200; $800 5 = $4,000; $2,500 + 5,200 + 4,000 = $11,700 collected 0.08 = $936 fee

Unit 13 $18,000 NOI 15,000 debt service = $3,000 CTO $30,000 equity = 0.10 = 10% $150,000 NOI 110,000 debt service = $40,000 CTO $320,000 equity = 0.125 = 12.50% 3-d $79,200 NOI $528,000 SP = 0.15 = 15% 4-c $250,000 SP 20% DP = $50,000 equity; $25,000 NOI 18,000 debt service = $7,000 CTO $50,000 equity = 0.14 = 14% $49,200 NOI 12% cap rate = $410,000 value 6-b $10,500 NOI 9% cap rate = $116,667 cash value Modern Real Estate Practice in North Carolina Ninth Edition 7-a 30 units $400 12 mos. = $144,000 PGI 5% = $7,200 vacancy/collection loss $144,000 PGI - 7,200 loss = $136,800 EGI - 54,000 operating expenses = $82,800 NOI; 82,800 10% cap rate = $828,000 AV 9-a 10-a 12-a 14-d Unit 14 and 15 2-a 4-c 8-a 10-c 12-d $1,050 12 mos. = $12,600 annual int. 0.06 = $210,000 LV 13-b 14-d 15-a $115,000 SP 15,000 DP = $100,000 LV 0.02 = $2,000 pts. 1 18-c 1 2 23-b 24-b 25-a 2 27-c 28-a 29-a $150,000 LV 0.015 = $2,250 pts. 30-a 7¼% ⅛% = 7⅛% 3 3 33-a 34-c 35-a 36-b 3 3 3 40-b 41-d 4 43-d 44-c 45-d 46-b 47-d 4

Modern Real Estate Practice in North Carolina Ninth Edition 4 50-c $846 12 mos. = $10,152 annual int. 0.065 = $156,184 LV 5 52-d 53-d 54-c 5 5 57-c $213,500 LV 0.055 = $11,742.50 ann. int. 12 months = $978.54 5 5 $84,000 12 mos. = $7,000 mo. income 28% = $1,960 PITI $285 TI = $1,675 max PI 6.32 = $265.032 1000 = $265,032 max on income ratio; $7,000 mo. income 36% = $2,520 (PITI + debt) $285 TI - $746 debt = $1,489 max PI 6.32 = $235.601 1,000 = $235,601 max on debt ratio Unit 16 2-d 4-a 5-a Unit 17 4-b 5-d 6-b 9-b 10-d 1 14-b 1 60-c 6 $386.64 360 months = $139,190 total PI payments - $72,000 LV = $67,190 total interest 6 63-d 64-c $412.50 12 mos. = $4,950 annual int. $60,000 LV = 0.0825 = 8¼% 65-b 66-d 67-a 68-a 6 70-d 7 72-a 73-a 74-c 75-b 76-d 7 78-c 9-b 10-a 1 1 13-b 16-b 17-d 1 $470 4 = $1,880 mo. rent 12 mo. = $22,560 PGI 0.65= $14,664 NOI $215,000 value = 0.0682 = 6.8% 2 2 23-b 24-b 2 26-d 27-a 28-a

29-a 30-c 3 32-a 33-b 34-c Unit 18 1-c 2-d $100,000 SP - $80,000 orig. price = $20,000 profit $80,000 orig. price = 0.25 = 25% 3-d 4-c $412,500 SP 1.10 [100% + 10% profit] = $375,000 orig. price 7-c Unit 19 3-b 4-a 5-b 7-d 8-c Unit 20 4-d 5-d 10-a 11-d 14-c 15-d 17-a 18-a 7-c 9-a 12-d Modern Real Estate Practice in North Carolina Ninth Edition 35-a 3 3 3 $215,000 SP [150 sq. ft. $80] + $2,500 ½-bath - $5,000 1-car garage = $200,500 10-a 1 $225,000 purchase price + $40,000 capital improvements = $265,000 adjusted basis; $290,000 SP $17,000 allowed CC = $273,000 amt. realized - $265,000 adj. basis = $8,000 capital gain; no tax on gain under $250,000 for single 1 20-c 2 2 2 24-c 2 26-b 14-a 1

Modern Real Estate Practice in North Carolina Ninth Edition Unit 21 4-d 5-b 7-c 1 12-d Appendix A 1-c 3-b 4-b 7-d 14-a 16-b 1 18-c 2 $96,000 SP 0.10 = $9,600 DP $96,000 $9,600 = $86,400 LV 0.015 10-c 1 12-d 1 14-a 1 16-b 17-d 1 22-d 23-a 24-c 25-a 26-b 27-c 2 20-c 2 22-d 23-a 24-b 25-d orig. fee = $1,296 $1,296 + 9,600 DP = $10,896 cash 9-b Math FAQs $162,275 sales price - $126,500 cost = $53,775 profit $35,775 $126,500 = 0.283 = 28.3% 2-d 4,320 SF $80.25 = $346,680 house + $12,785 fees + $145,000 lot = $504,465 3-a $54,990 commission $949,000 SP = 0.0579 = 5.8% 4-b 40 acres $2,220 SP = $88,000 sales price (present value) 100% + 14½% = 114.5 = 1.145 $88,000 1.145 = $76,855.895 = $76,855.90 5-b $4,410 = 100% gross commission: 100% 25% listing firm 5% MLS fee = 70% to co-brokering firm/selling agent $4,410 0.70 = $3,087 0.55 to selling agent = $1,697.85 (100% 45% retained by firm = 55%) 6-d $56,500 + $160.00 = $56,660 100% 7% = 93% = 0.93 $56,660 0.93 = $60,924.73 = $60,925 $168,500 SP 0.70 LTV = $117,950 LV or P $117,950 P 0.1125 rate = $13,269.375 annual interest 12 months = $1,105.78 monthly interest $1,292.22 monthly PI $1,105.78 monthly I = $186.44 monthly P $117,950 P $186.44 monthly P = $117,763.56 new LV 8-c $126,280.20 = $631,400 SP 9-b $71,424 net 0.93 [100% 7%] = $76,800 SP 10-a $62 per square foot 103,000 SF = $6,386,000 cost 0.05 [100% 95%] = $319,300

Modern Real Estate Practice in North Carolina Ninth Edition 1 $73,500 EGI $52,300 operating expenses = $21,200 NOI 0.11 cap = $192,727.27 1 30 years 40 years = 0.75 $560,000 cost 0.75 = $420,000 current value $51,000 0.80 = $63,750 SP 0.10 = $6,375 EMD $63,750 SP $51,000 LV = $12,750 DP $6,375 EMD = $6,375 cash needed 14-c $274,550 AV 0.85 = $323,000 MV 15-a $345 2 = $690 $425 3 = $1,275 $690 + $1,275 = $1,965 total rent 30 days = $65.50 per day 19 days = $1,244.50 seller s share $1,965 total $1,244.50 seller s share = $720.50 to buyer [debit seller/credit buyer] 1 $435,000 0.02 = $8,700 based on percentage $1,000 minimum monthly rent 12 months = $12,000 minimum rent paid 17-c $760 12 months = $9,120 minimum rent $20,520 total rent - $9,120 = $11,400 0.04 = $285,000 + $150,000 = $435,000 1 $87,500 0.50 = $43,750 AV 100 = 437.50 $7.80 = $3,412.50 taxes 5 years $48,000 = $240,000 0.075 = $18,000 3 years $48,000 = $144,000 0.05 = $7,200 2 years $48,000 = $96,000 0.035 = $3,360 $18,000 + $7,200 + $3,360 = $28,560 total commission $637 annual taxes 0.0490 = $13,000 AV 0.50 = $26,000 MV 2 $1,875 pts. $75,000 LV = 0.025 = 2.5 points 22-d 175 feet + 175 feet + 90 feet + 90 feet = 530 linear feet $1.25 = $662.50 installation 530 linear feet 6.5 height = 3445 SF $0.825 = $2,842.125 materials $662.50 + $2,842.125 = $3,504.625 = $3,504.63 total cost 2 $2,593.50 + $2,593.50 = $5,187 gross commission 0.065 = $79,800 SP 24-c 100 front feet $250 = $25,000 SP 0.08 comm. rate = $2,000 commission 25-b 10⅜% = 10.375% 9¾% = 9.75% 10.375 9.75 = 0.625 8 = 5 points 2 $568.75 12 months = $6,825 annual interest $136,500 loan = 0.05 = 5% 27-d $100,000 0.08 = $8,000 NOI $8,000 NOI 0.10 = $80,000 value: decreases more than $10,000 2 $22,000 NOI 0.08 cap rate = $275,000 MV 29-b $1,743.50 annual taxes 360 days = $4.8430555 daily tax bill Jan 1 Aug 12 = 222 days $4.843 = $1,075.15 seller prorated tax bill 30-a 195 425 = 82,875 sq. ft. 43,560 = 1.9 acres $35,000 = $66,500 LP 31-d $475,250 SP 500 =$950.50 rounds up to $951 tax 3 $295,000 SP 80% = $236,000 LV 1000 6.32 = $1491.52 monthly PI payment + $263 monthly escrow payment = $1,794.52 monthly PITI 28% = $75,194 minimum income requirement on debt ratio; $335 + 125 + 250 = $710 monthly debt + $1,794.52 monthly PITI = $2,464.52 36% = $82,151 min. income requirement on income ratio 33-b $64,200 annual income 12 = $5,350 monthly income 28% = $1,498 max. PITI $225 TI = $1,273 max. PI 5.53 = $230,199 min. income for debt ratio; $5,350 monthly income 36% = $1,926 max. PITI & debt $225 TI - $424 debt = $1,277 max. PI 5.53

Modern Real Estate Practice in North Carolina Ninth Edition = $230,922 min. income for income ratio 34-b $904.40 PI payment 360 payments = $325,584 total PI payments - $136,000 original principal = $189,584 total interest 35-a $500 360 = $1.3888 dues per day 118 days that seller owned property = $163.89 seller debit/buyer credit 3 $5,645 360 = $15.6806 tax per day 176 days that seller owned property = $2,759.78 seller debit/buyer credit b/c buyer will pay taxes after Sept. 1 st 37-d $4,788 360 = $13.30 tax per day 31 days that buyer will own property = $412.30 buyer debit/seller credit b/c seller prepaid taxes 38-c $7,238 360 = $20.1055 tax per day 264 days that seller owned property = $5,307.87 seller debit; 360 264 = 96 days that buyer will own property $20.1055 tax per day = $1,930.13 buyer debit 3 $1,100 rent 30 = $36.67 daily rent 12 days that buyer will own property = $440 rent seller debit/buyer credit; no proration of TSD, entire amt. goes with property ownership because it s tenant s money 40-b $285,000 LV 0.0675 = 19,237.50 annual int. 360 days = $53.4375 daily int. 3 days = $160.31 interim interest 41-c $40,000 1.25 acres = $50,000 land value; 10 yrs actual age 50 yrs economic life = 20% loss of value (depreciation of improvements); 100% orig. value 20% loss = 80% remaining value 1,845 sq. ft $96 = $177,120 replacement cost 0.80 = $141,696 + $50,000 land value = $191,696 current market value 42-a $225,000 NOI 140,000 DS = $85,000 CTO $400,000 equity = 0.2125 = 21.25% 43-a $310,000 purchase price + $50,000 capital improvements = $360,000 adjusted basis; $610,000 SP - $38,000 allowed CC = $572,000 amt. realized - $360,000 adj. basis = $212,000 capital gain; no tax on gain under $500,000 for couple filing jointly