A comparable sold eight months ago for $268,000 in a market that has been declining at 0.25% per month. What is the time-adjusted sale price?
Correct Answer
B) $262,640
Why this is correct: a declining market means the older sale is above what the property would fetch now. Calculation: 8 × 0.25% = 2%; $268,000 × 0.98 = $262,640. Why the other choices are wrong: $273,360 adjusts upward, which reverses the direction of a falling market; $268,000 ignores the decline; $261,300 applies 2.5% rather than the 2% the stated rate and period produce.
Why This Is the Correct Answer
Why this is correct: a declining market means the older sale is above what the property would fetch now. Calculation: 8 × 0.25% = 2%; $268,000 × 0.98 = $262,640. Why the other choices are wrong: $273,360 adjusts upward, which reverses the direction of a falling market; $268,000 ignores the decline; $261,300 applies 2.5% rather than the 2% the stated rate and period produce.
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