Page 44 - CalcBus_Flipbook

4-8 Percentages, Ratios and Relationships CH 4]

generally 6% of the purchase price, but this percent is split between the two Real Estate
offices involved in the transaction; there is the sellers agent and the buyers agent, so that
each office would receive a split of (6% ÷ 2 =) 3%. Then depending on the arrangement each
agent has with the office he is working from, his portion could reduce to 1.5% of the sale
price. On a residential house selling for $400,000 the agents commission would be (1.5% x
400,000 =) $6,000. Typical commissions on Agricultural land is 10% of the sale price, thus an
agent with the greatest split would receive 2.5% of the sale price as commission. On 160
acres of land selling for $4,000 per acre the sale price (base) would be (160 ac x $4,000/ac =)
$640,000. At 2.5% commission just for the selling agent, the commission would be ($640,000
x 0.025 =) $16,000. The total commission paid out (10% rate) would be ($640,000 x 0.10 = )
$64,000. What the seller of the land receives is ($640,000 — $64,000 =) $576,000 after
commissions are paid. This number decreases as there may be other charges associated with
the transfer of real property as dictated by state law.
It is important to know that percentage commissions are always negotiable between the
parties.

Everybody needs to save a portion (percentage) of their income for their personal savings
and investments, which should be done first with each paycheck. Then more dollars should
be set aside to pay for insurance, licensing fees on their vehicles and business, and
government taxation such as property taxes and income taxes. It is important to determine
what percentage of income to set aside for investments and the costs incurred.

From this discussion you have been reading about percentage Rate (% Rate), the Base
value and the Amount that is derived from the Rate and the Base when these are multiplied.
The equation we are using is:
Amount = Rate x Base,

and the Rate when given is as a percentage is converted to a decimal. As an equation you
could write:
A = RB or A = R x B

The relationship of RB is one of multiplication; R x B.

Calculating the Value

The equation A = RB is used to calculate the Amount. The basic rule for computing the
Amount when the percentage is given as the Rate is to convert the Rate to a decimal fraction
and then multiply it with the Base; and then complete the calculation.

Example A: Calculate 35% of $820.

Solution:
First convert 35% to a decimal fraction.

35% ÷ 100% = 0.35

Next multiply the decimal fraction, 0.35, by the $820 to yield the value.
$820 x 0.35 = $287.00

To Calculate the Amount, convert the percent to a decimal fraction and multiply

Example B: Calculate 25% of $76.40.

Solution:
First convert 25% to a decimal fraction.

25% ÷ 100% = 0.25

Next multiply the decimal fraction, 0.25 by the $76.40 to yield the value.

$76.40 x 0.25 = $19.10

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