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REVIEWER: Mathematics in Brokerage Practice

Problems/Question
1. A perimeter wall will be constructed on a 240 sqm. regular lot having a frontage of 12 meters. The wall is one meter below
and 3 meters above ground. If cost is P400.00 per sqm. compute the total cost of the wall excluding a space for a 3-meter wide
steel gate.
2. Mr. Castro owns a 240 sqm. rectangular lot with a 12 meter frontage. He will enclose it with a fence of hollow blocks, 1.7
meters high above the ground with 0.3 meter below the ground. The fence cost P250.00 per square meter. How much will be
the fencing cost if a 4 meter wide steel gate costing P7, 500.00 is installed?
3. Mr. Peralta bought a 200 sqm subdivision lot at P3, 000.00/sqm. He paid 25% downpayment, balance payable in 120 equal
amortizations at 21% interest per annum. He has paid 84 monthly amortizations totaling P737,612.60 inclusive of penalty
interest of P32,000.00. Compute for his cash surrender value under the Maceda Law.
4. In a sale of condominium unit, the following information were gathered:
Price per Deed of Sale
Zonal Value of Condominium Unit
Market Value of Condominium Unit
Assessor Value of land where the
condominium unit is built
Zonal value land where condominium
project is built
Floor area of the condominium unit sold

P 3,000,000,00
P 22,500.00/sqm.
P 1,500,000.00
P 2,500.00/sqm.
P 5,000.00/sqm.
150 sqm.

Compute for the capital gains tax on the above transaction.


5. An 800 sqm. lot with a house was sold for P3,500,000.00. Per tax declaration, the market value of the house is P1.5M and
lot is P1.6M. The zonal value of the lot is P3,500.00/sqm. The sale is subject to capital gains tax.
a. Compute the tax base
b. How much is the capital gains tax?
c. How much is the documentary stamps?
6. A registered real estate developer-dealer sold a house and lot unit for P950,000.00. Compute which of the following
taxes are applicable under the NIRC.
a. expanded withholding tax
b. documentary stamps
c. value-added tax
d. capital gains tax
7. A corporation is the lessor of a 7-door residential apartment with a monthly rental as follows:
3 doors at P8,000.00 each and 4 doors at P10,000.00 each. It incurred P20,000.00 worth of VAT
Invoiced expenses for repair and maintenance for January, 1998.
Compute the VAT payable for the month of January 1998.
8. Mr. Tan bought a subdivision lot for P 500,000.00. He paid a 20% downpayment, balance payable in 5 years, at 21%
interest per annum. The lot was contracted in December 1994 and his monthly amortization starting January, 1995 is P
10,820.00. E-VAT was implemented effective January, 1996.
a. Is his payment starting January 1996 subject to EVAT? Why?
b. How much is the total monthly amortization as of May 1996?
9. Gross sales receipts of a VAT-registered developer for 1996 were P 1,100,000.00 for January;
P 1,850,000.00 for February; and P 880,000.00 for March. Purchases from VAT-registered suppliers were P 660,000.00 for
January; P770,000.00 for February; and P550,000.00 for March.

Compute for the a) output tax b) input tax; VAT payable for the months of January, February and March.
10. A registered developer-dealer sold three house-and- lot units as follows:
a) P 450,000.00 per unit in Cabanatuan City
b) P 900,000.00 per unit in Sta. Rosa, Laguna
c) P 2,000,000.00 per unit in Quezon City
Compute the expanded withholding tax for each package.
11. Mr. Tan sold his property for P 1,800,000.00 with a downpayment of P1,200,000.00, and the balance which was secured
by a mortgage in the same property is payable in one year.
Compute the documentary stamp tax in order to register the transaction.
12. Mr. Samson hired the services of a broker to sell his property. The owner said he bought it at P 6,300,000.00 and wants a
30% gross profit. If you were a broker, at how much would you sell the property? If you will be paid 5% commission, how
much shall be added to the selling price that the 30% profit of Mr. Samson will not be affected?
13. A real estate broker has a listing of capital asset where the seller agreed to shoulder capital gains tax and brokers 5%
commission. At how much should the broker sell the property in order that the seller will realize a proceed of P4,895,000.00
net of commission?
14. At how much should Amante sell his property acquired at P6,300,000.00 if she desires a 30% gross profit rate?
15. A 3-hectare land was sold for P 300.00/sqm. and the seller agreed to pay commission based on the following rate: 5% for
the first P 1,000,000.00; 4% for the next 1,500,000.00; and 3% on the excess over P 2,500,000.00. Compute the gross
commission of the listing broker and selling broker if they agreed to 40% - 60% sharing in favor of the selling broker.
16. A 20 hectares land was sold at P1,125.00/sqm. The owner agreed to pay a commission based on the following rates: 5.0%
for the first 4.0M, 3.5% over P4.0M and 1.5% in excess of 10.0M. After deducting the 10% tax from the gross commission, how
much did the listing broker and the selling broker received if they have agreed to have a 50:50 sharing?
17. Ms. Cruz, a licensed real estate broker, obtained a net listing of P6,500,000.00. She sold the property at a price which is
inclusive of her 5% commission, capital gains tax and documentary stamps. The Deed of Sale provides that the buyer will pay
for the transfer and registration fees.
At how much was it sold?
18. A corporation bought 50 hectares of land for P700.00/sqm. If high-end development costs P 1,000,00/sqm based on
saleable area which is 60% of the gross area, compute the following:
a. Total land acquisition cost
b. Total development cost
c. Total unit cost per sqm of the saleable lots
d. If the projected gross mark up is 100% of the total unit cost/sqm
of saleable lots, what will be the selling price per sqm.?
19. A broker before offering to his client a hectare land for low-cost housing, prepared a simple profitably statement. The
estimated development cost is P300/sqm. based on the gross area.
Construction cost of the 100 housing units is P 3,000.00/sqm. with each unit having a floor area of 60 sqm. The land is being
offered at P300/sqm and the selling price per housing unit is P450,000.00. How much is his gross profit?
20. A corporation is developing a 10-hectare rawland purchased at P400.00 per sqm. Development cost is estimated at
P300.00 per sqm based on the gross area. Marketing inclusive of advertising and brokers commission is 15% of selling price. If
the company desires a gross profit of 30% of selling price, what would be the minimum selling price per sqm of the subdivision
lots assuming that saleable area is 70% of gross area.
21. A corporation owns two adjoining lots. Lot 1 with an area of 1,000 sqm and lot 2 with an area of 800 sqm. Recently, it sold
lot 1 at P2,000/sqm with 20% downpayment and the balance Payable in 5 yrs. at P 43,200.00 equal monthly amortizations. If

the corporation will sell lot 2 at the same price and terms as lot 1, compute the total amount of interest it will receive for lot 2
after it has been fully paid in five years assuming the buyer is regular in payment.
22. Jose bought a 1,060 sqm lot at P 1,400.00 sqm on installment basis with 50% downpayment and the balance payable in 5
yrs. at 21% interest per annum. After 3 regular monthly amortizations, he decided to pay the full balance. Compute the
following: (Factor is 0.02705)
a. Amount of downpayment
b. Monthly amortization
c. Interest expense for 3 months
d. Balance after 3 months
e. Final cost/sqm. after full payment
23. Ms.Reyes pays a monthly amortization of P54,100.00 for a parcel of land. The amortization factor for 5 yrs. at 21% interest
is 0.02705. If Ms Reyes paid a downpayment of 20% of the contract price, compute the following:
a. The principal obligation on which the monthly amortization is based
b. The contract price
c. The amount of downpayment
24. Mr. Reyes obtained a mortgage loan of P600,000.00 and made quarterly payments of P 50,000.00 plus interest at 16% per
annum. How much did he pay for the first year?
25. The sale of lots with an area of 100 sqm. each is 10 per month. The selling price per lot is P3,000/sqm with 15%
downpayment and the balance payable in 3 yrs. with interest at 18% per annum. If there are only 35 lots in the project and
amortization starts 30 days after the signing of the contract, What is his total monthly amortization as of fifth month? (factor
is 0.025393)
26. Emma buys a property at P 150,000.00. She paid as follows: P50,000.00 downpayment; P 30,000.00 at the end of the first
year; P40,000.00 at the end of the second year; and a final payment at the end of the fourth year. Compute for her final
payment if interest is 14% per annum.
27. Mr. Eric Santos pays monthly amortization of P54,100.00 for a parcel of land. The amortization factor for 5 yrs. at 21%
interest is 0.02705. If Mr. Santos paid a downpayment of 20% of the contract price, compute the following (5 points)
a. The principal obligation on which the monthly amortization is
based
b. The contract price
c. The amount of downpayment
28. AB Realty Corp. owns 2 adjoining lots, lot 1 with 1,000 sqm and lot 2 with 800 sqm. Recently, it sold lot 1 at P3,000.00 per
sqm, with 20% downpayment and the balance payable in 60 months at the rate of P67,689.33 equal monthly amortizations. If
AB Realty Corp. will sell lot 2 at the same price and terms as it sold lot 1, compute the total amount of interest that will be
received by AB Realty Corp. after lot 2 shall have been fully paid after 5 yrs.
29. Mrs. Chaves bought a property at P800,000.00 if paid in cash. On installment, she paid 20% downpayment. She paid P
300,000.00 at the end of the first year and another P300,000.00 at the end of the second year and a final payment after 3
years. Compute her final payment interest is 18% per annum.
30. LDC Realty Corp. owns 3 adjoining lots, lot 2 with an area of 800 sqm. Lot 3 with an area of 750 sqm. Lots 2 & 3 are priced
at P10,000.00 per sqm each while corner lot 1, with an area of 1,200 sqm, is being sold at P12,000.00 per sqm. Mr. Cuenca a
businessman wanted to buy the 3 lots at a discounted price. The corporation agreed to sell their lots to Mr. Cuenca with 5%
discount, 20% downpayment payable in 5 yrs with 20% interest per annum.( The fixed factor is 0.02649).How much is the total
discount? How much is the total contract price of the lots after deducting the discounts? Compute the total monthly
amortization.
31. Mr. Henson bought a 500 sqm subdivision lot at P2,200.00 per sqm. He paid 30% downpayment. The balance is payable in
two yrs at 18% per annum. He paid the owner 8 monthly amortizations and decided to pay the remaining balance. How much
did he pay to settle the balance? Fixed factor is 0.49924.

32. Ms. Mulawin bought a commercial lot with an area of 400 sqm for P12,000.00 per sqm. She paid a downpayment of 40%
and the balance is payable in one yr. in 12 equal monthly amortizations with an interest rate of 12% per annum (amortization
factor: 0.093113).After paying 4 monthly amortizations, she made a killing in the stock market and thus decided to pay off the
remaining principal balance. Compute for the following:
1. The last payment she made to pay off the remaining balance.
2. Total interest paid for the 4 monthly amortizations.
33. Mr. Blue sold to Mrs. Reed in June 1997 a residential lot for P960, 000.00 inclusive of a P100, 000.00 mortgage to be
assumed by the buyer. Mrs. Reed gave a downpayment of P60, 000.00 and the balance shall be paid in 8 equal monthly
installments without interest
Beginning July 1997. Mr. Blue realized a gross profit of 25% of acquisition cost. Compute the following:
a. Selling price
b. Contract price
c. Initial payment for taxable year 1997
d. Gross profit
e. Gross profit rate for tax purpose
f. Taxable income for 1997 and 1998
34. An investor bought an apartment property for P45M. The property earns a monthly income
Of P300,000.00 and its annual fixed and operating expenses total P400,000.00.What is his rate of return on investment?
35. Mr. Cui is into land banking. He bought a 3-hectare rawland at P10/sqm.
a. If his cost of money is compounded 100% every 5 yrs, what will be his cost after 20 yrs?
b. If he will sell the land for P200/sqm. after 20 yrs., what will be his gross profit?
36. A 4-door apartment is being rented for P6,000.00 per door, and is subject to annual maintenance of P14,400.00 and realty
tax of P6,000.00. A buyer for the property is satisfied with a 12% return on investment. At how much should he buy the
property?
37. A prospective buyer of a house and lot 300 sqm. consulted his architect who advised him that the present cost to
duplicate the house is P3M. The architect also estimated that effective age of the house is 10 yrs. and the economc life for
such structure is 50 yrs. If the buyer is willing to pay P5,000.00 per sqm lot, at how much should he buy the property?
38. An apartment property has an annual net income of P150,000.00. A buyer can aail of a mortgage loan equivalent to 70%
of the capital requirement at 15% annual interest. If the buyer Is satisfied with a 10% yield on his equity, at how much should
he buy the property?
39. A property has an annual gross income of P1,200,000.00. In his market study, an investor found that a comparable
property with an annual gross income of P1 M was recently sold for P6M. On the basis of the gross income multiplier
indicated by the comparable property, at how should he buy the property?
40. The title of the property describes the land as consisting of 6 hectares, 75 ares, and 800 centares. What is the area of the
land in square meters?
41. A parcel of land has the following features: area is 900 sqm.; it is a corner lot; higher than the road, and almost rectangular
in shape. If the prevailing price in the area if P10,000.00/sqm and subject lot has a corner influence of 15%, topographic value
of 5% because of elevation, and plottage value of 10% because of shape, determine the fair market value of the lot.
42. A 5-storey building was constructed on an 800 sqm. lot 10 yrs. ago. Floor area is 400 sqm / floor. Present reproduction
cost of the building is P10,000.00/sqm and the land was purchased 5 yrs. before the building construction at P5,000.00/sqm.
Assuming the depreciation rate of the building is 2.5% per year while land appreciation is 5% per year, what is the fair market
value of the property?

SOLUTIONS/ANSWERS (1 to 42 Items) Math in Brokerage Practice


1 Solution
Lot area

Frontage
Depth
Height of fence
Perimeter of lot
Wall perimeter
Cost of fencing

= 240 sqm

= 12 m
= 240 sqm / 12m = 20m
=4m
= 12m + 12m + 20m + 20m = 64m
= 64m 3m (gate) = 61m
= 61m x 4m x P400/sqm
= P97, 000.00

2 Solution
Compute for the width of the fence = area divided by length (area/L = width)
= 240sqm / 12m
= 20m
Height of fence
=1.7m (above ground) + 0.3m
= 2.0m
Perimeter = 2L + 2W
= 2 (12m) + 2 (20m)
= 64m
Fence
= total length gate
= 64m 4m
= 60m
Cost
= 60m x 2m x P250.00/sqm
= P30, 000.00
Plus (Gate) + 7,500.00
Total Cost = P37,500
3 Solution
Buyer has paid 7 yrs. ( 84 mos. Divided by 12 mos./year) and is therefore entitled to sixty
Percent (60%) refund

Refund is based on total payments made which includes down payments plus amortization
interest but exclusive of penalty interest.
Downpayment: 200 sqm x P3,000.00/sqm. X 25%
Amortization (P737,612.20 P32,000.00)
Basis of refund
Percentage of refund (50% + (5% x 2 yrs)
Amount of refund

= P150,000.00
= P705,612.20
= P855,612.20
= 60%
= P513,367.32

4 Solution
In the sale of condominium unit, tax base is only the price or unit zonal value whichever is
higher. Value per deed of sale is P3,000,000.00 while unit zonal value is 3,375,000.00
(P22,500 x 150sqm.). Therefore the tax base is P 3,375,000.00
Capital gains tax = P3,375,000.00 x 6% = P 202,500.00
5 Solution
a. Basis of CGT is whichever is higher between 1) price per deed of sale or 2) lot zonal value plus improvement
value
Improvement value is whichever is higher 1) price-lot zonal or 2) improvement value per
5

latest of tax declaration.


Price per deed of sale (house & lot)
= P3,500,000.00
Lot zonal value 800 sqm x P3,500.00
= P 2,800,000.00
Plus Improvement Value
Price-lot-zonal P 3,500,000.00 P 2,800,000.00 = P700,000.00
Improvement value per tax declaration = P 1,500,000.00
So improvement value per tax declaration
Is higher so use P1,500.000.00
Total basis of CGT
Lot zonal value
=P 2,800,000.00
Plus Improvement
+ P 1,500,000.00
Total basis of CGT
= P 4,300,000.00
b. Capital Gains Tax = P4,300,000.00 x 6% = P258,000.00
c. Documentary Stamps Tax
P4,3000,000.00 x 1.5% = P64,500.00
6 Solution
a. Withholding Tax
P 975,000.00 x 3.0% = P 28,500.00
b. Documentary stamp tax P 975,000.00 x 1.5% = P 14,250.00
c. The sale is not subject to VAT because it is a sale by dealer of
residential dwelling where the price does not exceed P 1,500,000.00
(as per BIR RR 1-2005)
d. Capital gains tax is not applicable because the property is not a
capital asset.
7 Solution
3 doors at P8,000.00 x 12 months = P 288,000.00 (exempt)
4 doors at P10,000.00 x 12 months = P 480,000.00
Annual Gross Income
= P 768,000.00
Considering that the annual gross receipts exceed P550,000.00.The units with monthly rental
Of P10,000.00 are vatable.
January output tax = P10,000.00 x 4 units x 1/11
= P 3,636.36
January input tax = P 20,000.00 x (480,000.00) x 1/11 = P1,136.36
768,000.00
VAT payable for January
= P 2,500.00
NOTE: Under the new RR 1-2005, residential units with monthly rent up to P10,000.00 are
Already VAT exempt
8 Solution
a. The sale is on installment basis because the initial payment in the year of sale (1994) did not
exceed 25% of the price. Therefore, installments beginning January 1996 are subject to EVAT
b. Amortization in 1995
P 10,820.00 x 12 mos.
= P 129,840.00
Amortization in 1996 (Jan-May)
P 10,820.00 x 5 mos. X 1.1%
= P 59,510.00
Amortization as of May 1996
= P 189,350.00
6

NOTE: The above applies to the EVAT law then in effect and has been revised by BIR Revenue
Regulations No. R 1-2005 and where sale of residential house and lots below P 1,500,000.00 are
No longer subject to VAT.
9 Solution
a) Output Tax
January = P 1,100,000.00 x 1/11
February = P 1,650,000.00 x 1/11
March = P 880,000.00 x 1/11

= P 100,000.00
= P 150,000.00
= P 80,000.00

b) Input Tax
January = P 660,000.00 x 1/11
February = P 770,000.00 x 1/11
March = P 550,000.00 x 1/11

= P 60,000.00
= P 70,000.00
= P 50,000.00

c) EVAT payable
January = P 100,000.00 - P 60,000.00 = P 40,000.00
February = P 150,000.00 - P 70,000.00 = P 80,000.00
March = P 80,000.00 - P 50,000.00 = P 30,000.00
10 Solution
a) Withholding tax = P 450,000.00 x 1.5% = P 6,750.00
b) Withholding tax = P 900,000.00 x 3.0% = P 27,000.00
c) Withholding tax = P 2,100,000.00 x 5.0% = P 105,000.00
11Solution
Documentary Stamp Tax on sale P 1,800,000.00 x 1.5% = P 27.00
Documentary Stamp Tax on Mortgage
1st P5,000.00 = P 20.00
Every P 5,000.00 in excess of P 5,000.00 = P 10.00
Amount of Mortgage P 1,200,000.00
1st P5,000.00
= P 20.00
P5,000.00 - P 1,200,000.00 (P10/P5,000) = P 2,390
Total documentary stamp tax on mortgage = P 2,410.00
12 Solution
a) Selling Price = P6, 300,000.00 + 30% (P6, 300.00) = P 8,190,000.00
b) Selling Price incl. commission
= P 8, 190, 000.00 = P 8,190,000.00 = P 8,621,025.63
100% - 5%
95%
13 Solution
Sellers expense = 6% (CGT) + 5% (commission) = 11%
Selling price = Net to Seller
= P 4,895,000.00 = P 5,500,000.00
(100% - expenses) ( 100% - 11% = 0.89)
14 Solution
Selling price = Acquisition Cost = P 6,300,000.00 = P 9,000,000.00
(100% - 30%)
70%
15 Solution
7

Selling price = 3 ha. X 10,000 sqm. x P 300.00/sqm


5% of P 1,000,000.00
4% of P 1,500,000.00
3% of P 6,500,000.00
Total Commission

= P 50,000.00
= P 60,000.00
= P 195,000.00
P 305,000.00

16 Solution
Total Area = 20 ha. x 10,000 sqm/ha.
= 200,000 sqms
Total Price = 200,000 sqm x P 1,125.00/sqm
= P 225,000,000.00
Commission:
First P 4.0M
= P 4,000,000.00 x .05
= P 200,000.00
Over P 4M-10M= P 6,000,000.00 x .035 = P 210,000.00
10M-225M
= P 215,000,000.00 x .015 = P 3,225,000.00
Gross commission
= P 3,635,000.00
Less 10% withholding tax
(363,500.00)
Net Commission
= P 3,271,500.00
Sharing of brokers 50:50 = x 50%
Share of each broker
= P 1,635,750.00
17 Solution
Given: Net Price to owner
Commission
Capital Gains tax
Doc. Stamps
SP = P 6,500,000.00
(100% - 5% - 6% - 1.5%)
SP = P 7,428,571.4

= P 6,500,000.00
= 5.0% of selling price
= 6.0% of selling price
= 1.5% of selling price
= P 6,500,000.00
0.875

18 Solution
a. Land Acquisition Cost = 50 Ha. x 10,000 sqm/ha. x P700.00
= P 350,000,000.00
b. Development Cost = 500,000 sqm x 60% x P 1,000.00
= P300,000,000.00
c. Lot unit cost
= (P 350M + P 300M) divided by 60%
500,000 sqm
= P 2,166.67
d. Selling price/sqm
= P 2,166.67 + P 2,166.67 (100%)
= P 4,333.34
19 Solution
Sales Income: 100 units x P 450,000.00
= P 45,000,000.00
Less: land 10,000 sqm x P 300
= P 3,000,000.00
Dev: 10,000 sqm x P 300
= P 3,000,000,00
Houses: 100 units x 60 sqm x P3T = P 18,000,000.00 = P 24,000,000.00
Gross Profit:

P 21,000,000.00
8

20 Solution
Total development cost = P 400.00/sqm + P 300.00/sqm
(based on gross area)
= P 700.00/sqm
Total cost
= P 700.00/sqm x 100,000 sqm
= P 70,000,000.00
Saleable Area (70%)
= 100,000 sqm x 70%
= 70,000.00 sqm
Cost per square meter = P 70,000,000.00
70,000 sqm
= P 1,000.00/sqm
Minimum Selling Price
= cost per square meter
(100 (30% + 15%)
= P 1,000.00
(0.55)
= P 1,818.18 per square meter
21 Solution
Total price = 800 sqm x P2,000.00
= P 1,600,000.00
Downpayment = 20% of P1,600,000.00
= - 320,000.00
Balance payable in 5 yrs (60 mos)
= P 1,280,000.00
Monthly Amortization Factor
=
x .027
Monthly Amortization
= P 34,560.00
Amortization period
=
x 60 mos.
Total amortization payment
= P 2,073,600.00
Balanced amortized
= P1,280, 000.00
Total interest paid
=P 793,600.00
Note: Amortization factor for lot 2 was extrapolated from sale of lot 1, as follows:
Total price: 1,000 sqm x P2,000.00
= P 2,000,000.00
Less: 20% downpayment
= P 400,000.00
Balance in 5 yrs.
= P 1,600,000.00
Problem states that no amortization for lot is P43,200.00. To get amortization factor, formula is
Monthly amortization divided by balance or P 43,200.00
P 1,600,000.00 = .027
22 Solution
a. Downpayment = 1,060 sqm x P1,400.00/sqm x 50%
= P 742,000.00
b. Monthly amortization = balance x factor
= P742,000.00 x 0.02705
= P 20,701.10
c. Amortization
interest
Principal
Balance
P 742,000.00
P 20,071.10
P 12,985.00
P 7,086.10
P 734,913.90
P 20,071.10
P 12,860.11
P 7,210.11
P 727,703.79
P 20,071.10
P 12,734.81
P 7,336.29
P 720,367.50
Total Interest
P 38,580.80
Note:
Monthly interest is 21% divided by 12 mos. 1.75%
1.75% of previous balance = amount applied to interest
Amortization less interest = amount applied to principal
Previous balance less amount applied to principal = new principal balance
9

23 Solution
a. Balance = Mo. Amortization = P 4,100.00 = P 2,000,000.00
Factor
.02705
b. Contract Price = Balance
= P 2,000,000.00 = P 2,500,000.00
(100%-20%)
80%
c. Downpayment = 20% of P 2,500,000.00 = P 500,000.00
24 Solution
Principal Payment P50,000.00 x 4 quarters
Interest: 1st Q: 4% of P 600,000.00
2nd Q: 4% of P 550,000.00
3rd Q: 4% of P 500,000.00
4th Q: 4% of P 450,000.00
Amount paid for first year

= P 200,000.00

= P 24,000.00
= P 22,000.00
= P 20,000.00
= P 18,000.00 = P 84,000.00
P 284,000.00

25 Solution
Total Price/lot : 100 sqm x P 3,000.00/ sqm
Downpayment: 15% of P300,000.00
Balance
Amortization Factor
Monthly Amortization

= P 300,000.00
= P 45,000.00
= P 255,000.00
x 0.025393
= P 6,475.22

Amortization for 1st 10 lots


P6,475.22 x 10 lots x 4 mos.

= P 259,008.80

Amortization for next 10 lots


P 6,475.22 x 10 lots x 3 mos.

= P 194,256.60

Amortization for next 10 lots


P 6,475.22 x 10 lots x 2 mos.

= P 129,504.40

Amortization for last 5 lots


P 6,475.22 x 10 lots x 1 mos.

= P 32,376.10

Amortization as of 5th month

= P 615,145.90

26 Solution
Interest
Payment at end of
1st year-P30,000

P14,000.00
(14% of 100T)

P16,000.00
(30T-14T)

Balance
P 100,000.00
P 84,000.00
(100T-16T)

Payment at end of
2nd year-P40,000

P14,000.00
(14% of 84T)

P28,240,00
(40T-P11,760)

P 55,760.00
(84T-P28,240)

Add interest 3rd year P7,806.40


(14% of P55,760)
Add interest 4th year P8,899.30

Principal

P63,566.40
(P55,760 + P7,806.40)
P 72,465.79
10

(14% of P63,566.40)

(P63,566.40 + P8,899.30)

27 Solution
a. The principal obligation on which the monthly amortization is based
b. The contract price
c. The amount of downpayment
a. Monthly Amortization = principal obligation amortized x factor
Principal obligation amortized = Monthly Amortization
Factor
= P 54,100.00/ 0.02705
= P 2,000,000.00
b. Total Contract Price = P 2,000,000.00/0.08
= P 2.500,000.00
c. Amount of downpayment = TCP x 20%
= P 2,500,000.00 x 20%
= P 500,000.00
28 Solution
For Lot 1
Total Price

= 1,000 sqm x P 3,000.00/sqm


= P 3,000,000.00
Less: Downpayment
= P3,000,000.00 x 20%
=P 600,000.00
Balance to be amortized = P3,000,000.00 P 600,000.00
= P 2,400,000.00
Monthly Amortization = P 67,689.33
Factor = Monthly Amortization
Amount Amortized
= P 67,689.33
P 2,400,000.00
= 0.0282039
To compute total interest for Lot 2
Total interest = Total Amortization Payments made
- Total Principal amount amortized
= P 3,249,089.40 1,920,000.00
= P 1,329,089.40
To compute total interest on lot 1
Total Amortizations = P 67,689.33 x 60 mos.
= P 4,061,359.80
Total Principal Amount Amortized = P 2,400,000.00
Total Interest
= Total Amortization Payments made
- total principal amount amortized
= P 4,061,359.80 P 2,400,000.00
Total interest on lot 1 = P 1,661,359.80
11

Total Interest on Lot 1 & 2


Total Interest lot 1
= P 1,661,359.80
Total Interest lot 2
= P 1,329,089.40
P 2,990,449.20
29 Solution
Balance after payment of downpayment
P800,000.00 20% (P800,000.00) = P 640,000.00
Interest P640,000.00 x 18% x 3 yrs. = P345,600.00
Total amount to be paid on the 3rd yr
Balance to be paid
= P640,000.00
Less payments made
= (P600,000.00)
(2 x P300,000.00)
P 40,000.00
Plus interest to be paid = P 345,600.00
Total to be paid on 3rd yr = P 385,600.00
30 Solution
Total price of lots 1 & 2
Lot 2 800 sqm
Lot 3 750 sqm
Total 1,550 sqm
Lot 1: 1,200 sqm x P 12,000.00/sqm = P14, 400,000.00
Lot 1 & 2: 1,550 sqm x P10,000.00/sqm = P15,500,000.00
Total lot nos. 1 3
= P 29,900,000.00
a. Total Discount P 29,900,000.00 x 5% = P 1,495,000.00
b. Total Contract Price = Total Price discount
= P29,900,000.00 P1,495,000.00 = P 28,405,000.00
c. Total M.A. = total contract price less 20%
= balance to be amortized x factor
= P28,405,000 x 0.8 x 0.02649
= P 601,958.76
31 Solution
Total Price: 500 sqm x P 2,200.00/sqm = P 1,100,000.00
Less downpayment (30%)
= - 330,000.00
Balance to be amortized
P 770,000.00
Monthly amort (P770,000.00 x factor 0.49924) = P 38,441.80
Prepare a Amortization Table (for interest and principal)
Balance of principal Forwarded
Mo. Amount paid
Interest
Principal
1
P 38,441.48
P 11,550.00 P 26,891.48
2
P 38,441.48
P 11,146.63 P 27,294.85
3
P 38,441.48
P 10,737.20 P 27,704.28

P 770,000.00
Balance
P 743,108.52
P 715,813.67
P 688,109.39
12

4
P 38,441.48
P 10,321.64 P 28,119.84
P 659,989.55
5
P 38,441.48
P 9,899.84
P 28,541.64
P 631,447.91
6
P 38,441.48
P 9,471.72
P 28,969.76
P 602,478.15
7
P 38,441.48
P 9,037.17
P 29,404.31
P 573,073.84
8
P 38,441.48
P 8,596.11
P 29,845.37
P 543,228.47
Payment to fully pay balance after 8 months amortization
P 543,228.47
32 Solution
Total Contract Price = 400 sqm x P 12,000.00/sqm
= P4,800,000.00
Downpayment

= P4,800,000.00 x 40%
= P 1,920,000.00

Balance = P 2,880,000.00
Monthly Amort = P2,880,000.00 x 0.093113 (factor)
= P 268,165.44
Create the payment table
Interest
= 12% / annum
Monthly 12% / 12 = 1% / month
Balance Forwarded
Mo Amount paid
Interest
1
P 268,165.44
P 28,800.00
2
P 268,165.44
P 28,800.00
3
P 268,165.44
P 28,800.00
4
P 268,165.44
P 28,800.00
Total
P 100,742.09
a. Last Payment
b. Total interest 4 mo. Amortization

Principal
P 239,365.44
P 241,759.09
P 244,176.69
P246,618.45

P 2,880,000.00
Balance
P 2,640,634.56
P 2,398,875.47
P 2,154,698.78
P 1,908,080.33
= P 1,908,080.33
= P 100,742.09

33 Solution
a. Payment to Seller
= P 860,000.00
Plus mortgage assumed = P 100,000.00
Selling price
= P 960,000.00
b. Selling price
= 960,000.00
Less mortgage assumed = P 100,000.00
Contract price
= P 860,000.00
c. Downpayment
= P 60,000.00
Installment (July- Dec) P100T x 6 mos. = P60,000.00
Total Payment for 1997
= P 600,000.00
d. Selling Price
= P 960,000.00
less acquisition(P960,000.00 divided by 125%) = P 768,000.00
Gross profit
P 192,000.00
e. Gross profit
= P 192,000.00 = 20%
divided by selling price P 960,000.00
13

f. Taxable income for 1997: 20% of P 660,000.00


Taxable income for 1998: 20% of P200,000.00

= P 132,000.00
= P 40,000.00

34 Solution
Annual net income P300,000.00 x 12 mos. P400,000.00 = P3,200,000.00
Rate = Annual Net Income = P 3,200,000.00 = 7.11%
Value
P45M
35 Solution
a. Acquisition cost/sqm
After 5 yrs. (P10 + P10)

= P 10.00
= P 20.00

After 10 yrs. (P20 + P20) = P 40.00


After 15 yrs. (P40 + P40) = P 80.00
After 20 yrs. (P80 + P80) = P 160.00
b. Selling price/sqm
= P 200.00
Unit cost/sqm
= P 160.00
Gross profit/sqm
= P 40.00
36 Solution
Annual Gross Income: 4 drs. X P6,000.00 x 12 mos.
Less: Maintenance P 14,400.00
Realty tax
P 6,000.00
= P 20,400.00
Annual Net Income = P 267,600.00
Value = Annual net income = P 267,600.00
Rate
12%

= P 2,230,000.00

37 Solution
Land: 300 sqm x P 5,000.00
House: Present Reproduction Cost = P 3,000,000.00
Depreciation: 10/50 or 20% - 600,000.00
Property Value
38 Solution
Annual Net Income = P 150,000.00
Capitalization Rate (Band of Investment)
% Portion
Interest
Equity
25%
10%
Mortgage
75%
15%
Overall rate

= P 288,000.00

= P 1,500,000.00
= P 2,400,000.00
P 3,900,000.00

Composite Rate
2.5% (25% x 10%)
11.25% 75% x 15%)
13.75%

Value= Annual Net Income = P 150,000.00 = P 1,090,909.00


Rate
13.5%
39 Solution
Gross Income Multiplier = Selling price of comparable property = P 6M = 6
Annual Gross Income of comparable
1M
Value = Annual net income of Subject x GIM
= P 1,200,000.00 x 6
14

= P 7,200,000.00
Price at which property should be bought =
40 Solution
6 ha. x 10,000 sqm. / ha.
75 ares x 100 sqm.
800 centares x 1 sqm.
Total

P 7,200,000.00

= 60,000 sqm.
= 7,500 sqms
=
800 sqms
= 68,300 sqms.

41 Solution
Value before adjustment: 900 sqms. X P 10,000.00 = P 9,000,000.00
Adjustments: corner
15% (+)
Topography 10% (+)
Plottage
5% (+)
30% of P9,000,000.00 = P 2,700,000.00
Fair Market Value of Land
= P11,700,000.00
42 Solution
Land Appreciation
= 5.0% / year
Building Depreciation = 2.5% / year
Land:
Value before adjustment 800 sqm x P5, 000.00
Add: Appreciation 5% x 15 yrs. x P4,000,000.00
Fair market value of land
Building:
Value before depreciation:
5-storey x 400 sqm x P10,000.00/sqm
Less Depreciation:
5 yrs. x 2.5% x P20,000,000.00
Fair Market Value of building
Total Property Value:
Land
Building
Total

= P4,000,000.00
= P3,000,000.00
= P7,000,000.00

= P20,000,000.00
= P 2,500,000.00
P17,500,000.00
P 7,000,000.00
P 17,500,000.00
P 24,500,000.00

43. PRACTiCE SET: PREPARING/Completing Listing Contract (SEPARATE SHEET)

15

PRACTICE SET: PREPARING/Completing Listing Contract (DDV, 138, 1-13)


You are a salesperson of Able Realty. On October 20, 2015, a listing was signed for a 10-year old house
owned by Mr. and Mrs. Sandro under an exclusive right to sell for 90 days. The property is a two-storey
brick house with four bedrooms, two baths, with full basement measuring 35 ft. x 40 ft. Its lot area is 120
x 40 ft., fenced, and described as Lot 9, Block F of the Lakeshore Subdivision, at Los Banos, Laguna,
addressed as 123 Sunrise Drive corner Sunset Drive, Lakeshore, Los Banos. The house has central A/C
system and an entrance foyer. The living room measures 15 x 12 ft. Bedrooms are about average size in
your opinion. Eat-in kitchen has built-in oven and range. The owners state that the dishwasher and
refrigerator will remain, but take the clothes washer and dryer. Water heating is provided by electric
power. Water is supplied by the public water system and the house is on sewer line. The J. P. Rizal
Elementary and high school just nearby. The local property tax rate 2% on an assessment level of 40% for
residential. The latest Tax Dec appraisal is P185,000.
You list the house for P199,500. Commission rate is 6% There is an existing assumable mortgage
loan with current balance of P136,466.81 at 6%, with equal monthly payment of P948.10. The owners
will accept a second mortgage for up to P20,000.00 at 9% interest for 7 years.
From the narrative description given to you by the client-seller, fill up the Listing contract) provided by
your supervising broker (prepare the Listing Form). Using the listing contract that you have prepared,
answer the following questions.
1. Which of the following is correct?
(A) The washer and dryer remain.
(C) Both A and B
(B) The refrigerator remains.
(D) Neither A nor B
2. The listing expires on
(A) January 18, 2016
(C) January 20, 2016
(B) January 19, 2016
(D) none of the above
3. Which of the following is correct?
(A) Natural gas heats the house.
(C) Both A and B
(B) The house is on sewer line
(D) Neither A nor B
4. Property tax paid for the year
(A) P1,480
(C) 2,480
(B) 3,700
(D) none of the above
5. If the house is sold at the listed price, the commission will be
(A) P10,970
(C) 11,970
(B) 9,970
(D) none of the above
6. The balance on the existing mortgage is
(A) P136,466.81
(C) 20,000
(B) 151,208.10
(D) 199,500
7. Which of the following is correct if the owners sold the property before the end of the listing period?
(A) broker is entitled for the commission
(C) broker is entitled for 50% commission
(B) broker is not entitled for commission
(D) salesman is entitled directly for the commission
8. Which features does the house have?
(A) Central air conditioning
(C) Both A and B
(B) A fireplace
(D) Neither A nor B
9. The basement measurements are
16

(A) 30 ft. x 40 ft.


(C) 35 ft. x 40 ft.
(B) 40ft. x 40 ft.
(D) none of the above
10. The lot is in the following Block of the Lakeshore Subdivision.
(A) A
(C) C
(B) B
(D) none of the above
11. Which of the following is correct?
(A) There is an eat-in kitchen.
(C) Both A and B
(B) the dining room is 15 ft. x 12 ft
(D) Neither A nor B
12. The listing is for a period of
(A) 90 days
(C) both A and B
(B) 3 months
(D) neither A nor B
13. The sale is subject to the following internal revenue tax(es)
(A) VAT or percentage tax
(C) income tax
(B) Capital gains tax
(D) none of the above

17

(Commonly Misspelled Words


'Separate' is most commonly misspelt word The eight-letter word came top due to the regular placing of
an 'E' where the first 'A' sits.
Second in the list was 'definitely', which often falls victim to a string of mistakes including mixing up the
second 'I' with an 'A'. Another common error is dropping the final 'E'.
'Manoeuvre', which is problematic due to the unusual combination of OE and U, came third and
'embarrass', in which an R or an S often falls by the wayside, was fourth.
'Occurrence' emerged as the fifth most commonly misspelt word due to confusion over the double C and
double R)
'Manoeuver',

18

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