Question

The park next to MS 172 is for sale for 950,000. The broker and the park commission have agreed that the commission rate will be 7% on the first 300,000 of sale price, 6% on the next 600,000 of sale price, and 5% on any sale price in excess of 900,000. If the park sells for 925,000, what will be the amount of commission? Explain how did you arrived to your answer. *

Answer 1

To calculate the commission for the park's $925,000 sale price, apply 7% on the first $300,000 and 6% on the remaining $625,000. No commission on the part exceeding $900,000 is needed since the sale price is less than that. Total commission is $58,500.

Step-by-step explanation:

To calculate the commission on the sale of the park for $925,000, we need to apply the different commission rates to the respective parts of the sale price as agreed by the broker and the park commission.

• 7% commission on the first $300,000 of the sale price.
• 6% commission on the next $600,000 of the sale price.
• 5% commission on any sale price in excess of $900,000.

Since the park is selling for $925,000, which is less than $900,000, the third commission rate does not apply. Therefore, we calculate the commission as follows:

1. First $300,000: 7% of $300,000 = $21,000
2. Remaining $625,000 (since $925,000 - $300,000 = $625,000): 6% of $625,000 = $37,500

The total commission is the sum of these two amounts: $21,000 + $37,500 = $58,500.