Chapter 3 Percent

Century 21 is the number-one consumer brand in the real estate industry. The parent company of Century 21 is Cendant. Cendant is an international provider of consumer and business services. One of the three principal areas of operation for Cendant is real estate. This company is also considered the world's largest franchiser of residential real estate, a major provider of mortgage services to consumers, and a global leader in corporate employee relocation. With the backing, support, and leadership of such a strong parent company, Century 21 is known for three main brand extensions. The first, fine homes and estates, is a specialized brand offering luxury properties with specially designed marketing materials and specific worldwide advertising in magazines aiming at an upscale market. Robert Moles, Century 21 president and CEO reported a 50% increase in sales for the first half of 1998 of luxury properties listed through fine homes and estates brand extension. In order to be listed with the fine homes and estates, the asking price must be at least $500,000. Moles attributed the increase to the low mortgage rate at that time.

Century 21's second brand extension offers fine recreational properties. This brand of property is targeted at specific recreation-oriented lifestyles. Ocean-side condominiums, weekend hideaways, and retirement homes can be found listed in publications that are aimed at recreation-minded buyers.

Finally, Century 21 also markets commercial and business properties throughout the world. This brand extension is the commercial investment network. This component has offices in over 25 countries and territories around the globe. They assist with the acquisition, management, and sale of commercial investment properties.

All this information and more can be found at www.century21.com.

Problem:

Preparation:

In preparation for this problem, review the objectives of Chapter 3. Pay close attention to the exercises on base, rate, and part. For each question:

• Read the short scenario
• Record the information given
• Answer each section of the questions by carrying out the proper calculations

Questions four and five require additional research on the Web.

Questions:

1. Robert Moles, Century 21 president and CEO reported a 50% increase in sales in 1998 of luxury properties listed through fine homes and estates brand extension. Assume in the first half of 1997 sales of luxury properties totaled $7,550,000.
   1. Review Chapter 3, Section 2 page 91, and explain in sentence form the terms base, rate, and part.
   2. What were the dollar amount sales for 1998 if the 1997 sales are $7,550,000?
2. In order to be listed with the fine homes and estates brand extension, the asking price for a property must be at least $500,000.
   1. A homeowner lists his home with Century 21. The owner is asking $470,000 for the home. What percent of $500,000 is this?
   2. If the owner has increased the asking price by 1/16 of his original asking price, can the home now be listed with the fine homes and estates? What is the new asking price?
   3. The first couple to look at the $470,000 house tells the Century 21 agent that the original asking price of the home is 4 1/5 times as expensive as the home they currently own. What is the value of the couple's home?
   4. Ed Herber, a Century 21 real estate agent, earns 6 1/2 % commission on the sale of property. How much commission did Ed receive if the house sold for $427,000?
3. A house has 4700 square feet (including the garage). The living room occupies 2/5 of the space, and the garage represents 1/10 of the space.
   1. What percent of space is occupied by the living room? By the garage?
   2. If the size of the living room is increased in size by 1/8 of the total square footage, how many square feet will the new living room have?
4. Go to www.c21firstchoice.com/21reas~1.htm, answer true or false to the following questions. Answers should be based upon information obtained from the Web site.
   1. An advertising budget in excess of $40 million per year has helped the Century 21 name to be recognized by 9 out of 10 American homeowners. _____
   2. Century 21 considers their name their most important asset. ____
   3. With the Century 21 worldwide network of approximately 6000 offices, the Century 21 system attracts more buyers and sellers. ____
   4. (d) Century 21 professionals are trained to help you answer important questions except when it comes to financing. ____
5. Go to http://thomsoninvest.netscape.com/cgi-bin/ns_report?ticker=CD&type=fin. From this site locate the most recent Quarterly Income Statement for Cendant. Compare the current year's revenues, operating profits, and income to the previous year's revenues, operating profits, and income. Calculate the percent of increase/decrease for each.

Include the date in your answers.

© Copyright 2000 Addison Wesley Longman, Inc.