Question

An office building is sold on the on December 12th. The monthly $720 bill for the property insurance was paid at the beginning of the month by the seller. How much does the buyer owe the seller in reimbursement for the extra insurance premiums the seller paid?

(31 Days - Date of the Sale = Remaining Days in the Month)
(Insurance Premium Rate / 31 Days = Daily Premium Rate)
(Daily Premium Rate x Remaining Days in the Month = Premium Reimbursement Owed by the Buyer)

Answer 1

To calculate the reimbursement amount for insurance premiums after the sale of an office building, the monthly premium is divided by the days in the month to find the daily rate, and then multiplied by the remaining days after the sale. The buyer owes the seller for the days they will own the building, with an example showing a reimbursement of $441.37 for 19 days in December.

Step-by-step explanation:

The question involves a prorated calculation, which requires an understanding of how to apportion costs based on the time of usage. The subject is Mathematics, specifically dealing with ratios, proportions, and real-world applications of basic arithmetic. It is typically a concept taught at the high school level.

To calculate how much the buyer owes the seller in reimbursement for the insurance premiums, we can break the process down into a few steps:

1. Calculate the daily premium rate by dividing the monthly insurance premium by the number of days in the month.
2. Determine the remaining days in the month after the sale.
3. Multiply the daily premium rate by the remaining days to find the amount the buyer owes the seller.

Given that the monthly insurance premium is $720 and there are 31 days in the month, the daily premium rate is $720 / 31 = $23.23 per day (rounded to two decimal places). If the building is sold on December 12th, there are 31 - 12 = 19 days remaining in the month. The buyer would owe the seller 19 days' worth of the premium, which is $23.23 * 19 = $441.37.