Real Estate Math
A Hawaii developer buys 5 acres at $200,000 per acre and subdivides into 20 lots of equal size. If they sell all lots at $60,000 each, what is the gross profit before development costs?
AA. $200,000✓ Correct
BB. $250,000
CC. $300,000
DD. $150,000
Explanation
Total cost = 5 × $200,000 = $1,000,000. Revenue = 20 × $60,000 = $1,200,000.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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