Cracking the Code: Understanding Illinois Real Estate Rent Calculations

If Graham Office Supply Store paid $1500 monthly rent plus 3% on all sales over $150,000 and a total rent of $25,000 annually, what were the total sales for the store?

• A. A. $200,000
• B. B. $316,667
• C. C. $383,333
• D. D. $410,000

Answer: (C)

To determine the total sales for the Graham Office Supply Store, we first analyze the components of the rent payment structure. The store pays a fixed monthly rent of $1,500, which totals to $18,000 annually (calculated as $1,500 multiplied by 12 months). Since the total annual rent is $25,000, we can find the excess rent due to the percentage on sales over $150,000. By subtracting the base rent from the total rent, we find that the additional amount paid due to the sales percentage is $25,000 minus $18,000, which equals $7,000. Next, we know that the additional rent is charged at a rate of 3% on sales exceeding $150,000. Let’s denote total sales as \( S \). The sales over $150,000 can be expressed as \( S - 150,000 \). The 3% on these excess sales can be set up in an equation: \[ 0.03(S - 150,000) = 7,000 \] To solve for \( S \), first isolate the term \( S - 150,000 \): \[ S - 150,000 = \frac

When you’re studying for the Illinois Real Estate Exam, understanding calculations is key, especially those relating to commercial properties. Let’s take a closer look at rent calculations using a real-life example about the Graham Office Supply Store. Trust me; it’s a lot more interesting than it sounds!

Imagine this: Graham Office Supply Store pays a base rent of $1,500 monthly, plus 3% on any sales exceeding $150,000. When yearly figures come into play, the total rent racks up to $25,000. You might wonder, how do we find the total sales from this information? Well, hang tight, and let’s break it down step by step.

Understanding the Structure

First, let's talk about the fixed monthly rent. That’s simple math—$1,500 multiplied by 12 months gives us $18,000 annually. Pretty straightforward, right? But here’s where it gets tricky: the total annual rent is $25,000. So, if we subtract the base rent from this total, we discover the extra amount that comes from the percentage on sales.

Let's Do the Math!

So, $25,000 minus $18,000 equals... yeah, you guessed it—$7,000! This extra $7,000 comes from the 3% charged on sales over $150,000.

Let’s denote the total sales as ( S ). Now, what are the sales over $150,000? That’s simply ( S - 150,000 ). To find our sales that contribute to that additional amount, we can set up an equation with that 3%:

[

0.03(S - 150,000) = 7,000

]

Isolating ( S )

Here’s the fun part! We’ll first isolate ( S - 150,000 ) to figure out ( S ).

[

S - 150,000 = \frac{7,000}{0.03}

]

Which simplifies to:

[

S - 150,000 = 233,333.33

]

Now, adding that back to $150,000:

[

S = 233,333.33 + 150,000 = 383,333.33.

]

So, when you round it off, the total sales for the Graham Office Supply Store is approximately $383,333. That’s right; the correct answer here is C. Isn’t it fascinating how a few straightforward calculations help unlock insights into a business’s financials?

Why Does This Matter?

Why should you care about these numbers? Well, understanding rent agreements and calculations is crucial for anyone looking to work in real estate. Whether you're planning to lease office space or sell property, these principles will come into play. They highlight the significance of knowing how costs are derived, especially in negotiations or when budgeting for future expenses.

So, as you prepare for your Illinois Real Estate Exam, keep these methods in your pocket. Every calculation you tackle hones your skills and builds confidence. Remember, it’s not just about passing the exam; it’s about developing practical skills that will set you apart in the competitive real estate market.

Happy studying! And who knows, maybe one day, you'll master the art of rent calculations and feel just as accomplished as Graham Office Supply feels about their sales!