A commercial lot measures 50 feet by 125 feet and sells for $455,000.

The correct answer is C, $72.80 per square foot.

First calculate the lot ' s area:

50 feet × 125 feet = 6,250 square feet

Then divide the total sale price by the total square footage:

$455,000 ÷ 6,250 = $72.80 per square foot

The common error is to add the dimensions or divide the sales price by only one dimension. Because the parcel is rectangular, its area is determined through length × width.

Price-per-square-foot calculations can help brokers, buyers, investors, and appraisers compare properties, but the metric should never be used by itself to determine value. Location, zoning, permitted use, frontage, utility availability, environmental conditions, access, shape, topography, development potential, and market conditions can cause two parcels with identical square footage to have substantially different values.

For examination purposes, however, all necessary information is provided and no adjustments are required.

Study Guide Reference: Real Estate Calculations — Land Area, Square Footage and Unit-Price Calculations.