Comparable A sold for $240,000 and contains 1,500 square feet. Comparable B sold for $375,000 and contains 2,500 square feet. The subject contains 2,000 square feet. Using the average of the two indicated rates, what value is indicated for the subject?
Correct Answer
B) $310,000
Why this is correct: A indicates $240,000 ÷ 1,500 = $160.00 and B indicates $375,000 ÷ 2,500 = $150.00, averaging $155.00. Calculation: 2,000 × $155.00 = $310,000. Why the other choices are wrong: $307,500 averages the two sale prices instead of the two rates, which silently weights the larger house more heavily; $300,000 and $320,000 use only B’s rate and only A’s rate rather than the average of both.
Why This Is the Correct Answer
Why this is correct: A indicates $240,000 ÷ 1,500 = $160.00 and B indicates $375,000 ÷ 2,500 = $150.00, averaging $155.00. Calculation: 2,000 × $155.00 = $310,000. Why the other choices are wrong: $307,500 averages the two sale prices instead of the two rates, which silently weights the larger house more heavily; $300,000 and $320,000 use only B’s rate and only A’s rate rather than the average of both.
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