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10 April, 06:14

Keisha is buying John's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). Existing hazard insurance of $350 has been paid by John through December 31. Use the 365-day method for prorating. What is Keisha's share of the existing hazard insurance already paid in full

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  1. 10 April, 07:24
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    Answer: $116.026

    Explanation:

    Given the following;

    Yearly hazard insurance = $350

    Keisha is the buyer and the closing date of transaction is September 1 of the year.

    January 1 till September 1 = 244days

    Now Keisha will have to credit John from September 2 till December 31st of that year

    Therefore,

    September 2 till December 31 = 365 - 244 = 121 days

    Daily hazard insurance = $350 : 365 = $0.9589

    Keisha's share = $0.9589 * 121 = $116.026
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