75. A ranch house with a double garage is being valued. The house next door, which is similar except that it lacks a garage and has an outside deck, was sold last month for $138,000. Experience in that area shows that a two-car garage is probably worth $10,000 to buyers, while in general, they will pay only $500 extra for a deck. The ranch house is most likely to sell for around
Answer: C
The ranch house is most likely to sell for around $147,500.
To determine the value of the ranch house with a double garage, we start from the comparable sale of the neighboring house, which sold for $138,000. Since the ranch house has a two-car garage valued at $10,000 more and the absence of a deck, we can calculate its estimated selling price.
A) 123,500
This option is incorrect as it significantly undervalues the ranch house. Considering the neighboring house's price of $138,000, even without accounting for the garage, this figure does not reflect the additional value provided by the garage.
B) 128,500
This option also underestimates the value of the ranch house. Adding the $10,000 value of the garage to the sale price of the neighboring house would still yield a price higher than $128,500, making this choice incorrect.
C) 147,500
This option is correct. The ranch house's value can be calculated by taking the neighboring house's sale price of $138,000 and adding the $10,000 value of the garage. Thus, $138,000 + $10,000 equals $148,000. However, since buyers are willing to pay only $500 extra for the absence of a deck, the final estimated price for the ranch house is $147,500.
D) 148,500
This option is incorrect because it overestimates the value of the ranch house by not factoring in the minimal value of the deck. While the garage adds $10,000 to the base price, the deck's $500 value should be deducted, leading to a price of $147,500, not $148,500.
Conclusion
The correct answer is $147,500, reflecting the addition of the garage's value while adjusting for the minimal extra value of the deck. All other options either undervalue or overvalue the house based on the comparative analysis provided, confirming that $147,500 is the most accurate estimate for the ranch house's market price.