Question

Certain closing costs will be prorated to account for the period of time during which the seller occupied the house. If a transaction is scheduled to close on May 17 (136 days into a 365-day year), calculate the amount that the buyer will be credited if the particular closing cost in question is estimated to be $1,000 for the entire year.A. $372.60B. $1,000.00C. $182.19D. $624.66

Answer 1

Answer:

Option (a) $372.60

Explanation:

Data provided in the question:

Number of days during which the seller occupied the house = 136 days

Estimated cost for the entire year = $1,000

Now,

The period of time during which the seller occupied the house in years

= Number of days during which the seller occupied the house ÷ Total number of days in a year

= 136 ÷ 365

= 0.37260

Therefore,

The amount that the buyer will be credited = 0.37260 × $1,000

= $372.60