Texas Real Estate Sales Agent — All Questions

A home sells for $350,000 with a total commission of 6%. How much is the total commission in dollars?

• a.$24,000
• b.$15,000
• c.$21,000✓
• d.$18,000

Multiply the sales price by the commission rate: $350,000 x 0.06 = $21,000. This total is then typically split between the listing and buyer's brokerages.

A property sells for $420,000 with a 6% commission. The listing and selling brokerages split it 50/50, and the listing agent keeps 60% of their brokerage's share. How much does the listing agent earn?

• a.$25,200
• b.$15,120
• c.$12,600
• d.$7,560✓

Total commission is $420,000 x 0.06 = $25,200; each brokerage gets half, or $12,600. The listing agent's 60% share is $12,600 x 0.60 = $7,560.

A buyer pays $280,000 for a home and puts 15% down. How much is the down payment?

• a.$56,000
• b.$4,200
• c.$28,000
• d.$42,000✓

Multiply the price by the down payment percentage: $280,000 x 0.15 = $42,000. The remaining $238,000 would be financed.

A lot measures 150 feet by 200 feet. What is its area in square feet?

• a.350 sq ft
• b.3,500 sq ft
• c.35,000 sq ft
• d.30,000 sq ft✓

Area of a rectangle is length times width: 150 x 200 = 30,000 square feet. To convert to acres, divide by 43,560.

One acre contains 43,560 square feet. How many acres are in a parcel of 87,120 square feet?

• a.1 acre
• b.3 acres
• c.2 acres✓
• d.4 acres

Divide the total square footage by 43,560: 87,120 / 43,560 = 2 acres. Memorizing that an acre is 43,560 square feet is essential for land math.

Annual property taxes of $4,800 are paid in arrears. At a closing on July 1 (with the year split evenly into two halves), what is the seller's share for the first half of the year using a 360-day proration?

• a.$800
• b.$1,200
• c.$4,800
• d.$2,400✓

With taxes paid in arrears, the seller owes for the portion of the year they owned the property. From January 1 to July 1 is half the year, so the seller's share is $4,800 x 6/12 = $2,400.

A home appreciates from $250,000 to $300,000. What is the percentage of increase in value?

• a.50%
• b.25%
• c.20%✓
• d.15%

The increase is $300,000 minus $250,000, or $50,000. Divide the increase by the original value: $50,000 / $250,000 = 0.20 or 20%.

A loan of $200,000 carries a 6% annual interest rate. How much is the interest for the FIRST month (simple interest)?

• a.$1,200
• b.$100
• c.$12,000
• d.$1,000✓

Annual interest is $200,000 x 0.06 = $12,000. Divide by 12 months to get the first month's interest: $12,000 / 12 = $1,000.

A property is assessed at $180,000 and the tax rate is $2.50 per $100 of assessed value. What is the annual property tax?

• a.$1,800
• b.$450
• c.$4,500✓
• d.$2,500

Divide the assessed value by 100 to get the number of taxable units: $180,000 / 100 = 1,800. Multiply by the rate: 1,800 x $2.50 = $4,500.

An investor's rental property produces net operating income (NOI) of $24,000 per year. Using a capitalization rate of 8%, what is the indicated value?

• a.$1,920,000
• b.$300,000✓
• c.$32,000
• d.$192,000

The income approach value equals NOI divided by the cap rate: $24,000 / 0.08 = $300,000. A lower cap rate would produce a higher value for the same income.

A seller wants to net $190,000 after paying a 5% commission (and no other costs). What must the sales price be, rounded to the nearest dollar?

• a.$180,500
• b.$200,000✓
• c.$199,500
• d.$209,000

The seller keeps 95% of the price, so price = $190,000 / 0.95 = $200,000. Checking: $200,000 x 5% = $10,000 commission, leaving $190,000.

A rectangular house has exterior dimensions of 40 feet by 50 feet. If construction costs $120 per square foot, what is the estimated construction cost?

• a.$96,000
• b.$24,000
• c.$2,400,000
• d.$240,000✓

The area is 40 x 50 = 2,000 square feet. Multiply by the cost per square foot: 2,000 x $120 = $240,000.

A buyer obtains a loan with an 80% loan-to-value ratio on a $325,000 purchase. How much is the loan amount?

• a.$162,500
• b.$260,000✓
• c.$32,500
• d.$65,000

Multiply the price by the LTV: $325,000 x 0.80 = $260,000. The remaining 20%, or $65,000, would be the down payment.

Monthly rent is $1,500 and the annual gross rent multiplier (GRM) for comparable properties is 12 times ANNUAL rent. What is the indicated property value?

• a.$216,000✓
• b.$1,800,000
• c.$150,000
• d.$18,000

Annual rent is $1,500 x 12 = $18,000. Multiply annual rent by the GRM: $18,000 x 12 = $216,000.

A home sells for $525,000 with a total real estate commission of 6%. What is the total commission in dollars?

• a.$26,250
• b.$52,500
• c.$3,150
• d.$31,500✓

Multiply the sales price by the commission rate: $525,000 x 0.06 = $31,500. This total is typically divided between the listing and buyer brokerages.

A property sells for $600,000 with a 7% commission. The listing and selling brokerages split it 50/50, and the listing agent keeps 70% of that brokerage's share. How much does the listing agent earn?

• a.$6,300
• b.$14,700✓
• c.$29,400
• d.$21,000

Total commission is $600,000 x 0.07 = $42,000; each brokerage receives half, or $21,000. The listing agent's 70% share is $21,000 x 0.70 = $14,700.

A buyer purchases a home for $360,000 and makes a 10% down payment. How much is the down payment?

• a.$36,000✓
• b.$18,000
• c.$72,000
• d.$3,600

Multiply the price by the down payment percentage: $360,000 x 0.10 = $36,000. The remaining $324,000 would be financed.

A rectangular lot measures 90 feet by 120 feet. What is its area in square feet?

• a.108,000 sq ft
• b.1,080 sq ft
• c.10,800 sq ft✓
• d.210 sq ft

Area of a rectangle is length times width: 90 x 120 = 10,800 square feet. To convert to acres, divide by 43,560.

One acre contains 43,560 square feet. How many acres are in a parcel of 130,680 square feet?

• a.3 acres✓
• b.2 acres
• c.4 acres
• d.5 acres

Divide the total square footage by 43,560: 130,680 / 43,560 = 3 acres. Remembering that one acre equals 43,560 square feet is essential for land math.

A parcel of land measures exactly one-half acre. Using 43,560 square feet per acre, how many square feet does it contain?

• a.43,560 sq ft
• b.21,780 sq ft✓
• c.87,120 sq ft
• d.10,890 sq ft

Multiply the acreage by 43,560: 0.5 x 43,560 = 21,780 square feet. A quarter-acre, by contrast, would be 10,890 square feet.

Annual property taxes are $3,600, paid in arrears. Using a 360-day (12 equal months) proration and a closing on September 1, what is the seller's share for the portion of the year already owned (January 1 through September 1)?

• a.$1,200 for the seller, covering the final four months of the tax year
• b.$3,600
• c.$300
• d.$2,400✓

From January 1 to September 1 is 8 months. The seller's share is $3,600 x 8/12 = $2,400, the amount the seller owed while owning the property in a taxes-in-arrears state.

A home appreciates in value from $400,000 to $460,000. What is the percentage increase in value?

• a.13% based on dividing the gain by the new, higher value of the home
• b.6%
• c.15%✓
• d.60% based on the raw dollar amount of the total increase in value

The increase is $460,000 minus $400,000, or $60,000. Divide the gain by the original value: $60,000 / $400,000 = 0.15, or 15%.

A property declines in value from $500,000 to $425,000. What is the percentage decrease in value?

• a.7.5% based on dividing the loss by ten times the amount of the decline
• b.15%✓
• c.18% based on dividing the loss by the new, lower value of the property
• d.75% based on the raw dollar amount of the total decline in value

The decrease is $500,000 minus $425,000, or $75,000. Divide the loss by the original value: $75,000 / $500,000 = 0.15, or 15%.

A loan of $180,000 carries a 5% annual interest rate. Using simple interest, how much interest accrues in the FIRST month?

• a.$75
• b.$750✓
• c.$9,000
• d.$900

Annual interest is $180,000 x 0.05 = $9,000. Divide by 12 months: $9,000 / 12 = $750 for the first month.

A property is assessed at $240,000 and the tax rate is $1.80 per $100 of assessed value. What is the annual property tax?

• a.$43,200
• b.$432
• c.$4,320✓
• d.$1,800 based on applying the rate to one-tenth of the assessed value

Divide the assessed value by 100: $240,000 / 100 = 2,400 units. Multiply by the rate: 2,400 x $1.80 = $4,320.

An income property produces net operating income (NOI) of $36,000 per year. Using a capitalization rate of 9%, what is the indicated value?

• a.$3,240 based on multiplying the income by the capitalization rate
• b.$324,000 based on multiplying the income by ten times the cap rate
• c.$40,000
• d.$400,000✓

The income approach value equals NOI divided by the cap rate: $36,000 / 0.09 = $400,000. A lower cap rate would indicate a higher value for the same income stream.

A seller wants to net $285,000 after paying a 5% commission and no other costs. What must the sales price be?

• a.$270,750 by subtracting 5% of the desired net from the net figure
• b.$285,000 because the commission is deducted from the buyer's funds instead
• c.$299,250 by simply adding 5% of the desired net back onto the net figure
• d.$300,000✓

The seller keeps 95% of the price, so price = $285,000 / 0.95 = $300,000. Checking: $300,000 x 5% = $15,000 commission, leaving exactly $285,000.

A rectangular house measures 60 feet by 45 feet. If construction costs $150 per square foot, what is the estimated construction cost?

• a.$405,000✓
• b.$40,500
• c.$27,000
• d.$4,050,000

The area is 60 x 45 = 2,700 square feet. Multiply by the cost per square foot: 2,700 x $150 = $405,000.

A buyer obtains a loan with a 90% loan-to-value ratio on a $250,000 purchase. How much is the loan amount?

• a.$275,000 based on adding ten percent to the purchase price
• b.$125,000 based on financing exactly half of the purchase price
• c.$225,000✓
• d.$25,000 based on financing only the ten percent above the down payment

Multiply the price by the LTV: $250,000 x 0.90 = $225,000. The remaining 10 percent, or $25,000, would be the down payment.

Comparable properties sell at a gross rent multiplier (GRM) of 11 times ANNUAL rent. If a property rents for $2,000 per month, what is the indicated value using the GRM?

• a.$264,000✓
• b.$22,000 based on multiplying one month of rent by the multiplier
• c.$24,000
• d.$132,000 based on multiplying six months of rent by the multiplier

Annual rent is $2,000 x 12 = $24,000. Multiply annual rent by the GRM: $24,000 x 11 = $264,000.

A borrower pays 2 discount points on a loan amount of $300,000. How much do the points cost at closing?

• a.$60,000 based on charging ten percent of the loan for the two points
• b.$600 based on charging one-tenth of one percent for each of the two points
• c.$6,000✓
• d.$3,000 based on charging one-half of one percent per point

Each discount point equals 1% of the loan amount, so 2 points equal 2% of $300,000: $300,000 x 0.02 = $6,000.

A buyer finances $180,000 on a home valued at $225,000. What is the loan-to-value (LTV) ratio?

• a.20% based on dividing the down payment by the value of the home
• b.80%✓
• c.125% based on dividing the value by the loan amount instead
• d.45% based on dividing the difference by the value of the home

LTV equals the loan divided by value: $180,000 / $225,000 = 0.80, or 80%. The borrower's equity is the remaining 20 percent, or $45,000.

An investor buys a property for $200,000 and later sells it for $250,000, with no other costs. What is the percentage of profit based on the original cost?

• a.12.5% based on dividing the profit by twice the original cost
• b.25%✓
• c.20% based on dividing the profit by the higher selling price instead
• d.50% based on treating the raw dollar profit as the percentage

The profit is $250,000 minus $200,000, or $50,000. Divide by the original cost: $50,000 / $200,000 = 0.25, or 25%.

An owner buys a home for $320,000 and later sells it for $272,000, with no other costs. What is the percentage of loss based on the original cost?

• a.48% based on treating the raw dollar loss as the percentage figure
• b.15%✓
• c.17.6% based on dividing the loss by the lower selling price instead
• d.7.5% based on dividing the loss by twice the original purchase price

The loss is $320,000 minus $272,000, or $48,000. Divide by the original cost: $48,000 / $320,000 = 0.15, or 15%.

Monthly rent of $1,800 was collected in full by the seller for the closing month. Closing occurs on the 21st, and the buyer owns the property from the 21st through the 30th (10 days, using a 30-day month). How much rent should be credited to the buyer?

• a.$600✓
• b.$900 for the buyer, splitting the month's collected rent evenly in half
• c.$1,260 for the buyer, covering the first twenty-one days of that month
• d.$180 for the buyer, covering only a single day of the closing month

Daily rent is $1,800 / 30 = $60. The buyer owns 10 days, so the credit is $60 x 10 = $600, reimbursing the buyer for rent the seller already collected for the buyer's ownership days.

A loan of $180,000 generated $10,800 in interest during its first year. What is the annual interest rate?

• a.6%✓
• b.60% based on treating the interest as a share of a smaller balance
• c.0.6% based on dividing the interest by ten times the loan amount
• d.16.7% based on dividing the loan amount by the interest instead

Rate equals interest divided by principal: $10,800 / $180,000 = 0.06, or 6%. This is the annual simple-interest rate on the loan.

A loan charges $625 of interest in its first month at a 5% annual simple-interest rate. What is the original loan (principal) amount?

• a.$7,500 based on stopping at the annualized interest without dividing by the rate
• b.$150,000✓
• c.$125,000 based on using a 6% rate instead of the stated 5% rate
• d.$12,500 based on dividing the monthly interest by the monthly rate incorrectly

Monthly interest of $625 equals $7,500 per year ($625 x 12). Divide annual interest by the rate: $7,500 / 0.05 = $150,000 principal.

A room measures 15 feet by 18 feet. Carpet is sold by the square yard. How many square yards are needed to cover the floor? (9 square feet = 1 square yard.)

• a.30 square yards✓
• b.270 square yards, using the square-foot area without converting to yards
• c.90 square yards, dividing the area by three instead of by nine
• d.27 square yards, using only the perimeter of the room in the calculation

Area is 15 x 18 = 270 square feet. Divide by 9 to convert to square yards: 270 / 9 = 30 square yards.

A property sold for $450,000, and the total commission paid was $27,000. What commission rate was charged?

• a.6%✓
• b.16.7% based on dividing the sales price by the commission instead
• c.3% based on dividing the commission by twice the actual sales price
• d.7% based on rounding the ratio up to the next whole percentage point

Rate equals commission divided by sales price: $27,000 / $450,000 = 0.06, or 6%. Multiplying back confirms $450,000 x 6% = $27,000.

A property is assessed at $150,000 with a tax rate of 25 mills. (One mill is $1 per $1,000 of assessed value.) What is the annual property tax?

• a.$37,500 based on treating each mill as ten dollars per thousand dollars
• b.$1,500 based on using a rate of ten mills instead of twenty-five
• c.$3,750✓
• d.$375 based on treating each mill as ten cents per thousand dollars

25 mills equals $25 per $1,000, or 0.025 as a decimal. Multiply by the assessed value: $150,000 x 0.025 = $3,750.

A rental property has a gross annual income of $60,000, a vacancy loss of 5%, and annual operating expenses of $18,000. What is the net operating income (NOI)?

• a.$57,000, subtracting only the vacancy loss and ignoring operating expenses
• b.$39,000✓
• c.$42,000, subtracting only the operating expenses and ignoring the vacancy loss
• d.$36,000, subtracting a full ten percent vacancy rather than five percent

Vacancy loss is $60,000 x 5% = $3,000, leaving effective gross income of $57,000. Subtract operating expenses: $57,000 - $18,000 = $39,000 NOI.

An income property has a net operating income (NOI) of $40,000 and recently sold for $500,000. What capitalization rate does that sale indicate?

• a.8%✓
• b.12.5% based on dividing the sale price by the income instead
• c.16% based on doubling the correctly calculated capitalization rate
• d.4% based on dividing the income by twice the actual sale price

Cap rate equals NOI divided by value: $40,000 / $500,000 = 0.08, or 8%. This rate can then be applied to value similar income properties.

A one-year hazard insurance policy costs $1,200 and was paid in advance by the seller. If the seller closes exactly 3 months into the policy year, how much should the buyer reimburse the seller for the unused coverage?

• a.$300, reimbursing only the three months the seller had already used
• b.$900✓
• c.$600, splitting the annual premium evenly between the parties
• d.$1,200, reimbursing the seller for the entire annual premium amount

Monthly premium is $1,200 / 12 = $100. Nine unused months remain, so the buyer reimburses the seller $100 x 9 = $900 for coverage the buyer will benefit from.

A property worth $200,000 appreciates 10% in the first year and another 10% on the new value in the second year. What is its value after two years?

• a.$264,000, incorrectly compounding at twenty percent for one of the years
• b.$240,000, adding a flat twenty percent of the original value across both years
• c.$220,000, applying only a single year of ten percent appreciation
• d.$242,000✓

After year one: $200,000 x 1.10 = $220,000. After year two: $220,000 x 1.10 = $242,000. Compounding produces $2,000 more than a flat 20 percent would.

A triangular lot has a base of 100 feet and a height of 80 feet. What is its area in square feet? (Area of a triangle = 1/2 x base x height.)

• a.2,000 square feet, dividing the correct area in half a second time
• b.180 square feet, adding the base and height rather than multiplying them
• c.4,000 square feet✓
• d.8,000 square feet, multiplying the base and height without halving the result

Area of a triangle is one-half base times height: 0.5 x 100 x 80 = 4,000 square feet. Forgetting the one-half factor would incorrectly give 8,000.

A home has 2,400 square feet of living area and is priced at $360,000. What is the price per square foot?

• a.$180 per square foot, dividing the price by two-thirds of the actual area
• b.$150 per square foot✓
• c.$100 per square foot, dividing by an area figure of 3,600 instead of 2,400
• d.$240 per square foot, dividing the price by a smaller 1,500-foot area

Divide the price by the square footage: $360,000 / 2,400 = $150 per square foot. Price per square foot is a common way to compare similar homes.

A 5-acre tract is being developed. 20% of the land is used for streets and drainage, and the remaining usable land is divided into 0.25-acre lots. How many lots can be created?

• a.16 lots✓
• b.10 lots, incorrectly setting aside half of the tract for streets and drainage
• c.20 lots, dividing the full five acres by the lot size with no land set aside
• d.25 lots, treating each usable acre as producing five lots of equal size

Usable land is 5 x (1 - 0.20) = 4 acres. Dividing by the lot size: 4 / 0.25 = 16 lots. Equivalently, 174,240 usable square feet divided by 10,890 square feet per lot is 16.

A mortgage has a remaining balance of $120,000 at a 4.5% annual interest rate. How much interest accrues in ONE month?

• a.$540, applying a 5.4% rate rather than the stated 4.5% rate
• b.$45, dividing the annual interest by 120 instead of by 12
• c.$450✓
• d.$5,400, using the full year of interest instead of a single month

Annual interest is $120,000 x 0.045 = $5,400. Divide by 12 months: $5,400 / 12 = $450 for one month.

A borrower has a $150,000 loan at 6% annual interest, with a monthly principal-and-interest payment of $899.33. In the first payment, how much is applied to PRINCIPAL?

• a.$149.33✓
• b.$750.00, the portion of the payment that is applied to interest, not principal
• c.$899.33, the entire payment, none of which is treated as interest here
• d.$0.00, because early payments on an amortized loan reduce no principal at all

First-month interest is $150,000 x 0.06 / 12 = $750. Subtract from the payment: $899.33 - $750 = $149.33 applied to principal.

One section of land contains 640 acres. How many acres are in one-half of a section?

• a.80 acres, the size of a one-eighth portion of a section of land
• b.640 acres, the size of a full section rather than one-half of it
• c.160 acres, the size of a quarter section rather than a half section
• d.320 acres✓

A section is 640 acres, so half a section is 640 / 2 = 320 acres. A quarter section would be 160 acres.

An investor buys a property for $180,000 and spends $20,000 on repairs, then sells it for $230,000. What is the percentage of profit based on total cost?

• a.25% based on ignoring the repair costs when figuring total cost
• b.13% based on dividing the profit by the higher final selling price
• c.27.8% based on dividing profit by only the original purchase price
• d.15%✓

Total cost is $180,000 + $20,000 = $200,000, and profit is $230,000 - $200,000 = $30,000. Divide profit by total cost: $30,000 / $200,000 = 0.15, or 15%.

Annual property taxes are $3,650, and a 365-day year is used for proration. The seller owned the property for 90 days of the tax year before a closing, with taxes paid in arrears. What is the seller's prorated share?

• a.$3,650, charging the seller for the entire year regardless of days owned
• b.$90, charging the seller for only a single day of the tax year
• c.$1,825, charging the seller for exactly half of the annual tax bill
• d.$900✓

Daily tax is $3,650 / 365 = $10. The seller owned 90 days, so the seller's share is $10 x 90 = $900 in a taxes-in-arrears proration.

A retail tenant pays base rent of $2,000 per month plus 5% of annual gross sales over $500,000. If annual sales are $700,000, what is the total annual rent under this percentage lease?

• a.$34,000✓
• b.$10,000, counting only the percentage rent and omitting the base rent
• c.$24,000, counting only the base rent and omitting the percentage rent
• d.$59,000, applying the 5% to all sales rather than only sales over the breakpoint

Percentage rent is 5% of ($700,000 - $500,000) = 5% x $200,000 = $10,000. Add annual base rent of $2,000 x 12 = $24,000, for total rent of $34,000.

A home purchased for $250,000 is now worth $325,000. What is the percentage increase in value?

• a.30%✓
• b.13% based on dividing the gain by twice the original purchase price
• c.75% based on treating the raw dollar gain as the percentage figure
• d.23% based on dividing the gain by the new, higher value of the home

The gain is $325,000 minus $250,000, or $75,000. Divide by the original value: $75,000 / $250,000 = 0.30, or 30%.

A buyer pays 1.5 points on a loan of $320,000. How much do the points cost?

• a.$4,800✓
• b.$480 based on treating each point as one-tenth of one percent of the loan
• c.$3,200 based on treating the charge as a single point on the loan
• d.$48,000 based on treating the points as fifteen percent of the loan amount

Each point is 1% of the loan, so 1.5 points equal 1.5% of $320,000: $320,000 x 0.015 = $4,800.

A total commission of $28,800 was paid on a $480,000 sale and split 50/50 between the two brokerages. How much did the listing brokerage receive?

• a.$7,200, giving the listing brokerage only a quarter of the commission
• b.$9,600, splitting the commission three ways instead of two
• c.$14,400✓
• d.$28,800, giving the entire commission to the listing brokerage alone

The total commission of $28,800 (which is $480,000 x 6%) is split evenly, so each brokerage receives $28,800 / 2 = $14,400.

A buyer purchases a $280,000 home with 20% down and pays closing costs equal to 3% of the loan amount. What is the total cash the buyer needs at closing?

• a.$8,400, counting only the closing costs and omitting the down payment
• b.$62,720✓
• c.$56,000, counting only the down payment and omitting the closing costs
• d.$64,400, calculating the closing costs on the price rather than the loan

The down payment is $280,000 x 20% = $56,000, and the loan is $224,000. Closing costs are $224,000 x 3% = $6,720, so total cash needed is $56,000 + $6,720 = $62,720.

A borrower's gross monthly income is $6,000. Using a 28% front-end (housing) qualifying ratio, what is the maximum monthly housing payment (PITI)?

• a.$2,160, applying a 36% back-end ratio rather than the 28% housing ratio
• b.$600, applying a 10% ratio rather than the stated 28% housing ratio
• c.$840, applying a 14% ratio rather than the stated 28% housing ratio
• d.$1,680✓

Multiply gross monthly income by the ratio: $6,000 x 0.28 = $1,680, the maximum monthly PITI under a 28 percent front-end guideline.

A parcel measures 200 feet by 435.6 feet. How many acres does it contain? (One acre = 43,560 square feet.)

• a.1 acre, ignoring one of the two dimensions when computing the area
• b.0.2 acres, dividing the square footage by ten times the acre conversion
• c.20 acres, dividing the square footage by a figure one hundred times too small
• d.2 acres✓

The area is 200 x 435.6 = 87,120 square feet. Divide by 43,560 square feet per acre: 87,120 / 43,560 = 2 acres.

A buyer makes a $48,000 down payment, which is 15% of the purchase price. What is the purchase price of the home?

• a.$276,000, subtracting fifteen percent from an assumed higher price
• b.$55,200, adding fifteen percent onto the down payment amount
• c.$320,000✓
• d.$7,200, treating the down payment as the answer's fifteen percent instead

If $48,000 is 15% of the price, then price = $48,000 / 0.15 = $320,000. Checking: $320,000 x 15% = $48,000.