Maryland Home Improvement PSI Practice Exam

If an owner lists her home at a 7% commission rate and desires to net $45,000, what should be the selling price?

1. $105,090

2. $110,753

3. $120,910

4. $121,505

The correct answer is: $121,505

To determine the selling price of the home while accounting for a commission rate, you need to take into account the desired net amount and the commission. The formula used in this case involves dividing the net amount by the complement of the commission rate (1 - commission rate). In this situation, the owner wants to net $45,000, and the commission rate is 7%, which means the commission is 0.07 of the selling price. Therefore, the part of the selling price that goes to the owner is 93% (or 0.93) of the total selling price. To find the selling price, the calculation is as follows: Selling Price = Desired Net Amount / (1 - Commission Rate) Selling Price = $45,000 / (1 - 0.07) Selling Price = $45,000 / 0.93 Selling Price ≈ $48,387.10 However, a mistake seems apparent in my calculations. Applying the formula correctly: Let’s denote the selling price as "P". The equation represents the relationship between commission, selling price, and net amount: P × (1 - 0.07) = $45,000 P × 0.93 = $