A rectangular lot measures 150 feet by 200 feet. If the lot is valued at $8 per square foot, what is the total land value?
Correct Answer
A) $240,000
The lot area is 150 × 200 = 30,000 square feet. At $8 per square foot, the total land value is 30,000 × $8 = $240,000.
Why This Is the Correct Answer
The correct calculation follows a two-step process: first, calculate the area by multiplying length × width (150 × 200 = 30,000 square feet). Second, multiply the total square footage by the per-square-foot value (30,000 × $8 = $240,000). This systematic approach ensures accuracy and follows standard appraisal methodology for land valuation. The answer of $240,000 represents the proper application of the unit value method for land appraisal.
Why the Other Options Are Wrong
Option B: $280,000
$280,000 likely results from a calculation error, possibly multiplying the perimeter (700 feet) by $400, or making an arithmetic mistake in the multiplication process.
Option C: $320,000
$320,000 appears to result from incorrectly calculating 40,000 square feet instead of 30,000, possibly by adding instead of multiplying dimensions or making an error in basic multiplication.
Option D: $2,800
$2,800 results from dividing instead of multiplying, calculating 30,000 ÷ $8 rather than 30,000 × $8, which represents a fundamental misunderstanding of the valuation process.
LAM Formula
LAM = Length × Area × Money. First find Length × Width for Area, then multiply Area by Money (per sq ft rate) for total Land value.
How to use: When you see land valuation problems, immediately think LAM: identify the Length and Width to get Area, then multiply by the Money rate per square foot.
Exam Tip
Always write out your calculation steps: Step 1 - Area calculation, Step 2 - Value calculation. This prevents rushing and catches arithmetic errors.
Common Mistakes to Avoid
- -Confusing perimeter with area calculations
- -Dividing instead of multiplying the rate
- -Forgetting to convert measurements to consistent units
Concept Deep Dive
Analysis
This question tests fundamental area calculation and land valuation skills essential for real estate appraisal. It requires converting linear measurements to square footage and applying a per-square-foot value to determine total land value. The problem combines basic geometry (rectangular area calculation) with real estate valuation principles. This type of calculation is foundational to the cost approach and land valuation methods used throughout appraisal practice.
Background Knowledge
Land valuation using the unit value method requires calculating total area in square feet and multiplying by the per-unit value. This method assumes uniform value across the entire parcel and is commonly used for residential and commercial land appraisal.
Real-World Application
Appraisers regularly use this calculation when valuing vacant land or allocating value between land and improvements using comparable land sales with known per-square-foot values.
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