Understanding Your Arizona Real Estate License Exam Calculations

Neighborhood Drug Store agrees to pay a base rent of $7 per square foot for their 1,500 square foot store plus 4% of their annual gross sales averaging $500,000. How much will they pay for the coming year?

• A. $1,666.67
• B. $1,785.00
• C. $2,541.67
• D. $2,716.67

Answer: (C)

To determine how much Neighborhood Drug Store will pay for the coming year, you first need to calculate their base rent and then add the percentage of their gross sales to that amount. The base rent is calculated by multiplying the square footage of the store by the price per square foot. In this case, with a store size of 1,500 square feet and a base rent of $7 per square foot, the calculation is as follows: 1,500 square feet × $7/sq ft = $10,500 Next, to find the additional amount owed based on gross sales, you calculate 4% of their annual gross sales. Given their average sales of $500,000, the calculation for this portion is: 4% of $500,000 = 0.04 × $500,000 = $20,000 Now, to find the total payment for the year, add the base rent to the percentage of gross sales: $10,500 (base rent) + $20,000 (sales percentage) = $30,500 It appears that the calculation leading to the options presents some confusion. Based on the initial breakdown, the correct answer should instead reflect the combined total of base rent and sales percentage. However,

The Arizona Real Estate License Exam can be a tad overwhelming, especially when it comes to calculations that involve rental agreements and percentages of sales. But here’s the good news: mastering these numbers is within your reach! Understanding the ins and outs of these calculations not only sets you up for exam success but also prepares you for your career in real estate. So, let’s break this down, shall we?

Imagine you’re tasked with figuring out a year’s worth of payments for a neighborhood drug store. They’re renting a 1,500 square foot space and, of course, they need to pay some rent. In our scenario, they agree to a base rent of $7 per square foot. Calculating base rent is a straightforward task; all you need is to multiply the total square footage by the rent per square foot. So, 1,500 square feet times $7 equals... drumroll, please... $10,500.

Now, hang on a minute! The excitement doesn’t stop there. On top of that base rent, they’re also paying 4% of their annual gross sales—let’s say they average around $500,000. You can see where this is going, right? To find out how much that percentage is, you simply take 4% of $500,000. That’s a neat $20,000.

So, to sum it up nicely, let’s get the total amount they’re paying for the year. You’ll need to add the base rent of $10,500 and that lovely sales percentage of $20,000 together. What do you get? A total payment of $30,500 for the year!

Now, you might be scratching your head at the answer options, wondering how different calculations led to numbers that didn’t match up. While the options presented in an exam question might throw you off course—like $1,666.67, $1,785.00, or even $2,716.67—it's vital to stick to those straightforward calculations. Remember, the real-life application of these numbers will help you navigate rental agreements once you're licensed and working in the field.

And hey, isn’t that what it’s all about? Gear up for the Arizona Real Estate License Exam by practicing calculation questions just like this. Familiarity breeds confidence, and with the stakes high, you’ll want to be as comfortable as possible calculating different types of rental agreements.

So, whether you’re reviewing for that big test or getting ready for your first listing, keep these key calculations close to your heart. Trust me, you’ll not only ace the exam but also become a savvy real estate professional in the sunny state of Arizona!