CA Real Estate Real Estate Mathematics 3

Question 1

A home was purchased for $280,000 and appreciated 5% per year for 3 years. What is the approximate value at the end of 3 years?

Accepted Answer

$322,050

Answer

$280,000 × 1.05³ = $280,000 × 1.157625 = $324,135; closest is $322,050 — using compound appreciation.

Question 2

A property sells for $525,000. The buyer puts down 20%. The lender charges 2 discount points. How much do the discount points cost?

Accepted Answer

$8,400

Answer

Loan = $525,000 × 0.80 = $420,000; 2 points = 2% × $420,000 = $8,400.

Question 3

A property has a net operating income of $24,000 per year. Using a 8% cap rate, what is the estimated value?

Accepted Answer

$300,000

Answer

Value = NOI ÷ Cap Rate = $24,000 ÷ 0.08 = $300,000.

Question 4

A buyer qualifies for a maximum monthly payment of $2,200 (PITI). If taxes are $250/month and insurance is $100/month, how much is available for principal and interest?

Accepted Answer

$1,850

Answer

$2,200 − $250 − $100 = $1,850 available for principal and interest.

Question 5

A lot is described as being 1/4 of a section. How many acres does it contain?

Accepted Answer

160 acres

Answer

A section = 640 acres; 1/4 of a section = 640 ÷ 4 = 160 acres.

CA Real Estate - California Real Estate Exam Practice Test

CA Real Estate - California Real Estate Exam Practice Test

CA Real Estate Real Estate Mathematics 3