You expect between 8% and 10% commission on each new deal.
How would you calculate your minimum expected commission for your latest deal, which closed for $30,000?
A 0.1 × $30,000
B 0.08 × $30,000
C (0.1 + 0.08) *\$30,000
D 0.8 × $30,000
E (0.1 + 0.8) *\$30,000
The correct answer and explanation is:
The correct answer is B 0.08 × $30,000.
To calculate the minimum expected commission on a deal that closed for $30,000, you need to use the lower end of the commission range, which is 8% (or 0.08).
Here’s how you would do the calculation:
- The commission rate is between 8% and 10%, so the minimum commission rate is 8% (0.08).
- To calculate the commission, you multiply the deal amount by the commission rate:
0.08×30,000=2,4000.08 \times 30,000 = 2,400. - This means the minimum commission expected from the $30,000 deal is $2,400.
Thus, B is the correct answer because it uses the lower commission percentage (8%) and applies it to the $30,000 deal amount. Other options are incorrect because:
- A uses 10% instead of 8% (0.1 × $30,000).
- C adds both commission rates (10% + 8%) and applies them together, which is not appropriate for calculating the minimum expected commission.
- D and E involve incorrect commission rates of 0.8 or 0.18, which do not fit the given commission range.