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| Math Central | Quandaries & Queries |
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Question from Steve: How do you figure this mark up question: I estimate the cost to build a house for $250,000.00. I mark it up by 20%: $250,000 x 1.20 = $300,000 base price (BP) without sales commission. I want to set the sale price (SP) to include a 6% commission to pay the real estate fee. After the 6 % fee is paid I want to net the $300,000 base price. The formula is basically: |
Hi Steve,
You have done most of the work to get $300,000 + 6% of SP = SP. 6% of SP is 0.06 × SP and hence you have
$300,000 + 0.06 × SP = SP
Now you need to do a little algebra to solve for SP. First subtract 0.06 × SP from both sides to get
$300,000 = SP - 0.06 × SP = SP( 1 - 0.06) = 0.94 × SP
Then divide both sides by 0.94 and you find
SP = $300,000/0.94 = $319,148.94
So ask $320,000 and see what happens.
Penny
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