The Correct Answer and Explanation is:
The correct answer is 0.08 * $30,000.
Here is a detailed explanation of how to arrive at this answer.
The problem asks you to determine the formula for calculating the minimum expected commission from a deal. The key pieces of information provided are the total value of the deal, which is $30,000, and the range of the commission rate, which is between 8% and 10%.
To calculate any commission, you multiply the total sale amount by the commission rate. The question specifies that you need to find the “minimum expected commission.” This means you should use the lowest possible commission rate given in the range. Between 8% and 10%, the minimum rate is 8%.
Before you can use a percentage in a multiplication formula, you must convert it into a decimal. To convert a percentage to a decimal, you divide the number by 100. In this case, you convert the minimum rate of 8% into its decimal equivalent:
8% = 8 / 100 = 0.08
Now, you have the two numbers needed for the calculation: the deal amount ($30,000) and the minimum commission rate in decimal form (0.08). The correct formula is to multiply these two values together. This gives you the expression: 0.08 * $30,000.
Let’s review why the other options are incorrect. The options (0.1 + 0.8) * $30,000 and (0.1 + 0.08) * $30,000 are incorrect because they involve adding rates, which is not the correct procedure. The option 0.8 * $30,000 is incorrect because 0.8 represents 80%, not the required 8%. Finally, the option 0.1 * $30,000 would calculate the maximum possible commission (using the 10% rate), not the minimum. Therefore, the only option that correctly calculates the minimum commission is 0.08 * $30,000.
