Market analysis indicates an unadjusted rate of $85,000 per acre for all 4.0 acres of a corridor, and no other adjustment applies. What value does this rate indicate?
Correct Answer
C) $340,000
Indication = 4 acres × $85,000/acre = $340,000. The indicated result is $340,000. Common errors: misplacing the decimal in the acreage gives $34,000; misplacing the decimal in the rate gives $3,400,000; reporting the unit rate instead of the total gives $85,000.
Why This Is the Correct Answer
Option C is correct because 4 acres × $85,000 per acre = $340,000. The unadjusted rate applies to all 4.0 acres and no other adjustment is supported, so the multiplication gives the indicated value.
Why the Other Options Are Wrong
Option A: $34,000
Option A, $34,000, results from misplacing the decimal in the acreage, effectively using 0.4 acre (4 × $85,000 ÷ 10). The correct value is 4 × $85,000 = $340,000.
Option B: $85,000
Option B, $85,000, is the per-acre unit rate, not the total for the corridor. It must be multiplied by 4 acres to give $340,000.
Option D: $3,400,000
Option D, $3,400,000, results from misplacing the decimal in the rate, effectively using $850,000 per acre (4 × $85,000 × 10). The correct value is $340,000.
Rate times quantity equals total
A unit rate is the price of one unit. Multiply it by the number of units to get the total.
How to use: Use this to avoid reporting a unit rate as the final value.
Exam Tip
If an answer choice equals one of the given inputs, check whether it is just the unit rate rather than the total.
Common Mistakes to Avoid
- -Reporting the per-acre rate as the total value
- -Misplacing the decimal in acreage
- -Misplacing the decimal in the rate
Concept Deep Dive
Analysis
This question tests applying a per-acre rate to the full acreage. Multiply the acreage by the per-acre rate. The distractors reflect decimal errors and reporting the unit rate instead of the total.
Background Knowledge
Price per acre is a common unit of comparison for larger tracts and rural or corridor land. Once a rate is supported by market analysis, it is applied to the subject's acreage, with any supported adjustments for differences such as shape, access or encumbrances.
Real-World Application
An appraiser values a 4-acre strip for a proposed pipeline corridor where market analysis supports a per-acre rate. The appraiser multiplies the supported rate by the acreage to indicate the corridor's value.
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