Four comparables indicate $148, $152, $151 and $149 per square foot. The subject contains 1,850 square feet. Using the mean of the four rates, what value is indicated?
Correct Answer
B) $277,500
Why this is correct: the mean of the four rates is ($148 + $152 + $151 + $149) ÷ 4 = $150.00. Calculation: 1,850 × $150.00 = $277,500. Why the other choices are wrong: $273,800 and $281,200 apply the lowest and the highest rate rather than the mean; $279,350 applies $151, which is one comparable’s rate and not the average of the four.
Why This Is the Correct Answer
Why this is correct: the mean of the four rates is ($148 + $152 + $151 + $149) ÷ 4 = $150.00. Calculation: 1,850 × $150.00 = $277,500. Why the other choices are wrong: $273,800 and $281,200 apply the lowest and the highest rate rather than the mean; $279,350 applies $151, which is one comparable’s rate and not the average of the four.
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