Phil Dunphy, a real estate agent, is considering whether he should list an unusual $516,464 house for sale. If he lists it, he will need to spend $3,787 in advertising, staging, and fresh cookies. The current owner has given Phil 6 months to sell the house. If he sells it, he will receive a commission of $21,213. If he is unable to sell, the house, he will lose the listing and his expenses. Phil estimates the probability of selling this house in 6 months to be 28%. What is the expected profit on this listing?

Phil Dunphy, a real estate agent, is considering whether he should list an unusual $516,464 house for sale. If he lists it, he will need to spend $3,787 in advertising, staging, and fresh cookies. The current owner has given Phil 6 months to sell the house. If he sells it, he will receive a commission of $21,213. If he is unable to sell, the house, he will lose the listing and his expenses. Phil estimates the probability of selling this house in 6 months to be 28%. What is the expected profit on this listing?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

On Robin’s birthday, his grandmother gave him a ring that was worth $6,000 at the time of the gift. Robin’s grandmother had purchased the ring for $5,400. What is Robin’s basis in the ring if he sells it for $7,000? What if he sells it for $5,000? What if he sells it for $5,800? fill in the blank regardless of sales price
Joy, a sole proprietor involved in AirBnB, needs to sell almost all of his apartments. The selling prices were originally 500,000 on average. Because of circumstances, she had to quickly sell these at 350,000 on average less a 10% commission payable to whoever referred the buyers to her. What is the depreciated replacement value?
T wins a door prize as the one-thousandth customer walking through the door of his favoritecoffee shop. He is given a choice of $1,000 in cash or a cappuccino machine(which cost the shop $1,000, but has a retail value of $1,500). T chooses the machine.a. T has realized at least $1,000 of income.b. T will recognize income only if and when he sells the machine.c. Both (a) and (b) are correct.d. None of the above. T bought an antique desk and chair from her employer for $50 in Year 1 when the firmbought all new office furniture. The desk and chair had a fair market value of $500.The property increases in value to $700 in Year 2, and T sells it for $900 in Year 3.a. T has realized income of $450 in Year 1 only if the difference between thevalue of the items and their price was intended as compensation.b. T will realize income of $450 in Year 1 regardless of her employer’s motive.c. T will realize income in Year 2 because the property has increased in value.d. None of the above
Soo Young purchased a new home for $510,000. At the same time, he sold a home for $495,000 in which he had a net equity of $304,000 after paying off the existing mortgage of $191,000. He used $224,300 that equity as a down payment on the new home while borrowing the rest with a new mortgage. He used $50,000 of the net equityto buy a new SUV. The closing costs on the sale of his old home were $29,700 and were subtracted from the net equity. What is the immediate impact of this transaction on Soo Young's net worth? a. His net worth decreases by $29,700. b. His net worth decreases by $94,700. c. His net worth increases by $15,000. d. His net worth increases by $20,300. e. His net worth remains the same.
Use the following information. When "trading up," it is preferable to sell your old house before buying your new house because that allows you to use the proceeds from selling your old house to buy your new house. When circumstances do not allow this, the homeowner can take out a bridge loan.Tina and Mike have sold their house, but they will not get the proceeds from the sale for an estimated 4 months. The owner of the house they want to buy will not hold the house that long. Tina and Mike have two choices: let their dream house go or take out a bridge loan. The bridge loan would be for $93,000, at 8.5% simple interest, due in 120 days. (Round your answers to the nearest cent.) a) How big of a check would they have to write in 120 days? b) How much interest would they pay for this loan?
Joy, a sole proprietor involved in AirBnB, needs to sell almost all of his apartments. The selling prices were originally 500,000 on average. Because of circumstances, she had to quickly sell these at 350,000 on average less a 10% commission payable to whoever referred the buyers to her. The form of liquidation process described here is?
In April of 2021, Bill purchased a new automobile for $90,000 that will be used 100% for business. If Bill did NOT have to consider the limitations for depreciation on automobiles, he would be able to deduct $____ in regular MACRS depreciation and bonus depreciation the first year. However, he will only be able to deduct $ ______due to the luxury limitations (considering allowable bonus depreciation).
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Josaline, the owner of a construction company, is planning to purchase specialized equipment to complete a contract awarded to her company. The first cost of the equipment is $250,000 with a life of 3 years at which time she will no longer need the equipment. The operating cost is expected to be $75,000 per year. Alternatively, a subcontractor can perform the work for $175,000 per year. Because the equipment is specialized, Josaline is notsure about the salvage value. She estimates a likely salvage of $90,000, but it might have to be scrapped for as little as $10,000 in three years. TheMARR is 15% per year.a. Is her decision to buy the equipment sensitive to the salvage value?b. Determine the salvage value at which the two alternatives break even.
You have been transferred to New Mexico for your post-graduate internship. You and your spouse have 2 children. You decide you need a home. The current owner of the home will sell it to you for $120,000, or you can rent it for $900 per month on a 1-year lease. You believe you could resell the home after 1 year for $130,000. Should you purchase the home or rent it?

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