The Correct Answer and Explanation is:
The correct answer is $2,400.
To determine the minimum expected commission, you must use the lowest percentage rate provided in the given range. The problem states that you expect to earn a commission of between 8% and 10% on a deal that closed for $30,000. The key word in the question is “minimum,” which directs you to use the 8% rate for your calculation, as it represents the lowest possible commission within the expected spectrum.
The calculation process is straightforward. First, you need to convert the percentage into a decimal to make it usable in a multiplication formula. To convert 8% to a decimal, you divide it by 100, which gives you 0.08.
Next, you multiply the total value of the deal by this decimal. The formula is as follows:
Total Deal Amount × Minimum Commission Rate = Minimum Expected Commission
Plugging the numbers from the problem into this formula, you get:
$30,000 × 0.08 = $2,400
This result, $2,400, represents the absolute minimum amount of commission you should anticipate from this transaction based on the terms provided. While your final commission could be higher, potentially reaching the maximum of $3,000 (which is 10% of $30,000), the question specifically asks for the calculation of the minimum expectation. This figure establishes a baseline for your earnings on this deal, ensuring you know the floor value of your compensation for the successful closure. It is a fundamental calculation for anyone working on a variable commission structure to understand their potential earning scenarios, especially the most conservative one.
