A house sold for $240,000 in January and, unchanged, resold for $252,000 the following January. A comparable to the subject sold six months ago for $310,000. Using the rate the resale pair indicates, what is that comparable’s time-adjusted price?
Correct Answer
A) $317,750
Why this is correct: the resale pair indicates $12,000 on $240,000, or 5% over twelve months, so six months is 2.5%. Calculation: $310,000 × 1.025 = $317,750. Why the other choices are wrong: $325,500 applies the full annual 5% to a sale only six months old; $313,875 applies 1.25%, which is a quarter of a year rather than half; $310,000 ignores the rate the pair was extracted to provide.
Why This Is the Correct Answer
Why this is correct: the resale pair indicates $12,000 on $240,000, or 5% over twelve months, so six months is 2.5%. Calculation: $310,000 × 1.025 = $317,750. Why the other choices are wrong: $325,500 applies the full annual 5% to a sale only six months old; $313,875 applies 1.25%, which is a quarter of a year rather than half; $310,000 ignores the rate the pair was extracted to provide.
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