XXVI

COMMISSION AND BROKERAGE

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345. Commission.-Many business transactions carried out by agents. As a rule the compensation is a certain per cent of the sum involved in the transaction and is called commission or brokerage. In the form of an equation this is

Also the net returns to the owner are:

NS CS-SX R% = S(1 - R%). (2) Explain.

=

EXERCISES

1. How would you go about finding a buyer for a house, a lot, or land that you desire to sell?

2. What will be a real-estate agent's commission at 3 % for selling a house and lot at $ 5950? What will the owner of the house receive?

3. What is the legal rate of real-estate commission in your state? What would be an agent's commission at this rate for selling a house for you at $4650? What would you pay an agent if you bought a house that he had listed for $3500?

4. What is the commission on selling a house for $ 3500 at 21% ?

5. What is the legal real-estate commission in your state on a house and lot sold for $ 3850? sold for $4700? sold for $4500?

6. What is the commission at 5% on selling a lot for $600 ?

7. If the per cent of commission is known, how can the per cent of the sales price received by the owner be found? Show that this is 1 r %.

8.

9.

10. In a certain city the real-estate agents charge a commission of 2%. For how much must a house be listed in order to net $ 4500 after the commission is paid?

11. What will be the commission for selling a half-section of land at $65 per acre if the commission is 2 %? What will the owner of the land receive?

12.

When land is selling at $45 per acre which will net the better commission, $ 1.50 per acre or 3 %?

13. For what must land be sold so that a 5% commission and $2 per acre will be equal?

14. What commission on a 9-mo. salary will a teacher pay who accepts through a teachers' agency a position that pays $150 per month? $125 per month? $185 per month? The commission is 5% of first year's salary.

15. State by an equation the monthly wages received by a salesman, in terms of his fixed salary and of a per cent commission on all sales.

16. A travelling salesman receives a salary of $125 per month and a commission of 1% on all sales. Find his income for a month in which his sales were $3570.

17. A travelling salesman is offered a salary of $ 225 per month or a commission of 21% on all sales. Last year his sales averaged $10,500 per month. Which arrangement ought he to accept?

EXERCISES

1. Mr. Wiles sent three notes for $ 135.40, $ 85.60, and $245 respectively to his collecting agent. For collection of the first two he paid 10 % and for collection of the third 25 %. How much did the collecting agent remit to Mr. Wiles?

2. Mr. Wilsmore loaned $ 500 to a reliable merchant at 6% for one year and to another merchant he loaned $400 at 10% also for one year. Find the amount of each note at the end of the year. Suppose that he had to pay $5 and 10% commission for collecting the second note. What rate of interest did this pay him on his whole investment? Which was the better investment?

Brokers usually charge % of par value of stocks and bonds for either buying or selling, with a minimum charge of $2 for each transaction.

3. What will a broker charge for selling 6 Pike Township bonds with a par value of $ 500 each?

4. What will be received for 7 city bonds, par value $100 each, if sold at $85?

5. What will be paid for 6 C. and A. bonds sold at 961% of the par value, if par value of each bond is $ 1000? 6. What will the broker receive who bought and sold the bonds of Exs. 4 and 5?

Make the commission 2¢ per bushel in the following:

7. A car of wheat weighing 46,500 lb. is sold at $ 1.09 per bushel. What will be the commission for selling and what will be the net returns to the owner?

8. A car of corn weighing 48,600 lb. is sold in Chicago at 58¢ per bushel. What will be the commission for selling and what will be the net returns to the owner?

346.

XXVII

COMMERCIAL DISCOUNTS

Reasons for Discounts.-Commercial or trade discounts are reductions from original prices. These arise frequently. The retailer makes a reduction on damaged articles, goods sold out of season, and on whatever he may have an oversupply. The wholesaler sells at a discount odd lots, an oversupply, especially large orders, and for prompt payment. The bill at the top of page 315 states that it is due in 60 da., but that 2% discount will be given if paid within 30 da., and 4 % if paid cash, that is, within 10 da.

Wholesale firms issue expensive catalogues which it would be exceedingly costly to reissue with every change in price. Furthermore, a retail merchant may often make a sale of goods not in stock by showing a catalogue to his customer. If the wholesale prices were printed in the catalogues this could not be done. Hence, it is customary to print in catalogues a price higher than the actual price and then provide the retail merchant with a private discount list. This discount list can be renewed cheaply and simply as prices change.

347. Forms of Discounts. In retail trade discounts are often a stated amount or a stated new price. In wholesale trade discounts are as a rule a per cent of the original marked price. State an illustration.

348. Finding the Discount.-The discount, D, is always a certain rate or per cent, R%, of the marked price, Mp. Hence,

349. Finding the Net Price. The net price, Np, is what remains after subtracting the discount from the marked price. Thus,

By replacing D with the value found in (1) we get

(2)

(3)

(4)

Explain equation (4) fully.

EXERCISES

1. Find the discount upon goods valued at $ 450 if the rate of discount is 5 %; 12 %; 33%.

2. A bill of goods amounting to $845 can be discounted at 3% if paid cash, but need not be paid for 2 mo. What will be the discount if it is paid cash?

3. If money is borrowed at the bank to pay the above bill, the interest rate being 8 %, what will be saved? What will be the per cent of saving?

4. Mrs. Baker finds that canned goods which cost her 28¢ each can be bought by the dozen at a discount of 7%. What will she save on 5 doz. in buying them by the dozen ?

5. Find how much the 5 doz. of canned goods cost Mrs. Baker by equation (2); by equation (4).

6. What per cent of the marked price is paid when the discount is 10%? 15%? 331 %? 43 %? 28 %? 63%?

7. What is the quantity inside the parentheses in equation (4)? Apply to Ex. 6 above.