Real Estate Math
A Virginia developer buys land for $500,000. She builds 20 homes at $150,000 each in construction costs. She sells all homes at $220,000 each. What is her gross profit?
A$900,000✓ Correct
B$1,400,000
C$700,000
D$1,100,000
Explanation
Total revenue = 20 × $220,000 = $4,400,000. Total cost = $500,000 land + (20 × $150,000) = $500,000 + $3,000,000 = $3,500,000.
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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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