Real Estate Math

A Florida property closes on March 15. Annual insurance premium of $2,400 was pre-paid by the seller through December 31. How much does the buyer owe the seller for the pre-paid insurance at closing? (Use 30-day months)

A$1,940

B$1,900✓ Correct

C$1,960

D$2,000

Explanation

Days remaining after March 15: 15 days in March + April through December = 15 + 9 months × 30 = 15 + 270 = 285 days. Daily rate = $2,400 ÷ 360 = $6.

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