Math Formulas
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Part, over Base
times Rate; also called Result, over Base times Rate; also called
the “Pie Formula” or the “T Formula” (It’s all the same thing), can be used
in a variety of circumstances. If you
know any two of the three pieces in the formula, you can figure out the one
you’re missing. For example, in
Commission problems (shown at the right), the Sale Price times the Commission
Rate would give you the Commission (the actual dollar amount paid by the
seller. The Commission divided by the
Commission Rate would give you the Sale Price, and the Commission divided by
the Sale Price would give you the rate in decimals (you then need to move the
decimal point two places to the right to convert it to a percentage). |
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For Commission problems, the formula would be: _______Commission________ Sale Price X Commission Rate To figure the share received by a salesperson or by
another broker use: Salesperson’s or Other Broker’s
Share Total Commission X Percentage To figure the amount received by the seller after paying
the commission use: ____________Seller’s Net____________ Sale Price X (100% – Commission
Rate) |
For Tax problems, the
formula would be: _______Annual Tax_______ Assessed Value X Tax Rate Remember the rate will be expressed in Mills (1 Mill =
.001, 50 mills would be .050, and so on). To find the Assessed Value from the Market Value (or
vice-versa): ________Assessed Value_______ Market Value X Assessment (Rate) If you are prorating taxes (or anything else) between a
buyer and a seller, make sure you know whether your state exam uses a 360-day
year or a 365-day year. That will
affect your answer. Also make sure
you know who is responsible for the day of settlement and when taxes are
considered to be due on the state exam. |
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For Interest Problems: _______Interest_______ Principal X Interest Rate Remember, the Principal is the CURRENT balance of the
loan. Also remember, the time period
for the Interest and the Interest Rate MUST be the same. Interest Rates are normally quoted at a
yearly rate, which would mean you would normally get a year’s worth of
interest up top. If you needed the
monthly interest you would divide by 12.
If you knew the monthly interest, you would first multiply by 12, so
you could insert the yearly amount into the formula. If you have the interest for a different
time period (such as quarterly or for multiple years), then pay careful
attention, so you are converting to a yearly amount. |
To Calculate
Profit or Return: ____Amount of Profit or
Return_____ Original Investment X Rate of
Return Rate of Return also would probably be calculated on an
annual basis, unless the question asks for the TOTAL Return. Percentage of Profit probably would be the
total amount, unless the question asks for the annual amount. |
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Just a quick review of
factor charts, which are used to calculate the monthly payment for principal
and interest on a Fully Amortized Loan. Using the chart to the right as an example, start in the
left column and find the interest rate.
Next, go across until you are under the term of the loan. That number would be the factor. For example, if you go down to 8%, and
across to 30 years will give you a factor of 7.34. Once you have the factor, multiply that number by the
number of thousands in the loan (the loan amount divided by 1000). A 100,000 dollar loan divided by 1000
would equal 100. That multiplied by a
factor of 7.34, would give you a monthly payment of $734 for principal and
interest. |
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Rate/Term
15-year 30-year 7% 8.98 6.65 7˝% 9.27 6.99 8% 9.56 7.34 8˝% 9.85 7.69 Did I forget anything? |