Three comparables produce adjusted indications of $288,000, $292,000 and $296,000. The appraiser weights them 50%, 30% and 20% in that order. What value is indicated?
Correct Answer
A) $290,800
Why this is correct: each indication is multiplied by its weight and the products are summed. Calculation: ($288,000 × 0.50) + ($292,000 × 0.30) + ($296,000 × 0.20) = $144,000 + $87,600 + $59,200 = $290,800. Why the other choices are wrong: $292,000 is the unweighted mean, which is what weighting was chosen to avoid; $293,200 applies the weights in reverse, giving the least reliable comparable the most influence; $288,000 takes the best comparable alone and discards the other two.
Why This Is the Correct Answer
Why this is correct: each indication is multiplied by its weight and the products are summed. Calculation: ($288,000 × 0.50) + ($292,000 × 0.30) + ($296,000 × 0.20) = $144,000 + $87,600 + $59,200 = $290,800. Why the other choices are wrong: $292,000 is the unweighted mean, which is what weighting was chosen to avoid; $293,200 applies the weights in reverse, giving the least reliable comparable the most influence; $288,000 takes the best comparable alone and discards the other two.
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