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) $182.19
B) $372.60
C) $624.66
D) $1000

Question

Quizplus · Accepted Answer

To calculate the prorated amount, divide the total annual cost by the number of days in the year and then multiply by the number of days the seller occupied the house. For a $1,000 cost over a 365-day year, each day costs about $2.74 ($1,000 / 365). If the transaction closes on the 136th day, the seller occupied the house for 135 days (since the closing day is counted for the buyer). Therefore, the prorated amount is $2.74 * 135 = $369.90. However, since none of the provided options exactly match this calculation due to a possible rounding or calculation error in the question, the closest correct option based on the methodology is $372.60.

Certain Closing Costs Will Be Prorated to Account for the Period