PRACTICAL APPRAISAL MATHEMATICS

1. ARITHMETIC MEAN – the mean of the distribution. It is defined as the sum of the scores or value
of the individual observations.

2. BIMODAL – refers when the distribution has two categories containing the same number of
observation.

3. INTEREST – refers to
1. Cost of using somebody else money
2. Return on capital
3. Two types: SIMPLE AND COMPOUND

4. SIMPLE INTEREST – refers

1. To interest earned only one original principal and not on the accrued interest + P.
2. Formula: Interest ( i ) = Principal (P) x Rate (%) x Time

5. COMPOUND INTEREST – refers to the interest which is periodically added to principal and in
effect a new balance draws additional interest.

6. Many mathematical computations arise all over the appraisal process. The Appraiser should know
how to calculate them, like knowing the area in square meter of a building, area of a triangle or a
square or rectangle, etc. the Appraiser should also know how to compute the volume of any shape,
property boundaries (metes and bounds as well as distances).

7. LET US TRY TO REFRESH OUR MEMORIES ON MEASUREMENTS AND SHAPES –

1. AREA – is the space inside a two-dimensional shape.
Formula: Area (A) = Length (L) x Width (W)
2. RIGHT ANGLE – is the angle formed by 1⁄4 of a circle. Full circle is 360 degress and 1⁄4 is
90 degrees. Hence, It is a 90-degree angle
3. RECTANGLE – is a closed figure with 4-sides that are at right angles to each other
4. SQUARE – is a rectangle with 4-sides of equal length. If it is with sides each 1-foot long it is
square foot (sq.ft), if one-inch long it is square inch, if in meter it is square meter and if
kilometer it is square kilometer (sqkm). Square feet are expressed by using the exponent 2
like ft2 which is 5 feet-squared, meaning 5’ (ft) x 5’ (ft) or 25 square feet. The exponent
indicates how many times the number or unit of measurement is multiplied by itself which is
called as the power of the number or unit is measure. So 5 3 will be 5 x 5 x 5
5. TRIANGLE – is a closed figure with 3-straight sides and 3-angles.
Area of Triangle (A) = 1⁄2 Base (B) x Height (H)
6. VOLUME – defined as the space a 3-dimensions object occupies. When a shape has more than
one side and encloses a space it has a volume.
7. FLAT SHAPES – squares, rectangles, triangles have no volume, it has 2-dimension (length,
width or height) while shapes with volume have 3- dimensions (length, width and height).
Formula: V = Length (L) x Width (W) x Height (H)
8. TRAPEZOID – is computed with the formula: 1⁄2 sum of parallel side x altitude

8. STATISTICS – is
 PRACTICAL APPRAISAL MATHEMATICS

1. The science of collecting, classifying and interpreting information based on the number of
things/objects
2. A tool to show a more general fashion how quantified real estate information can assists in
the evaluation of both the internal and market forces affecting the real estate value
3. Used by Appraisers to support the assumptions that allow an estimate of value.

9. A VARIATE – is a single item in a group, one single-family home is a variate and all variates in a
group can make a population.

10. Basic concept of measurement used in statistics includes measures of central tendency which
describes the typical variate in a population like: sales price for single-family residence, rent for
square meter for offices spaces, etc.

11. Three common statistical measures which are used to identify the typical item or variate in a
sample/population
1. MEAN DEVIATION (MD) –
• Average of the absolute differences of the individual scores from the mean
• The sum of the variates divided by the number of variates
2. MEDIAN –
• The midpoint of an ordered distribution or that point above which and below which
exactly one-half of the scores lies
• Measure of control tendency which locates the exact center of distribution
• Found by dividing the number of variates/sample into two equal groups
3. MODE – the most frequently appearing score or variate in a distribution

12. Measures of dispersion may be computed to estimate the spread of the data to establish whether
variates are grouped closely about the mean or median or are widely dispersed or it simple describes
the variance in a data set.

13. THREE COMMON MEASURES OF DISPERSIONS

1. RANGE – measures of the difference between the highest and the lowest scores in a
distribution
2. AVERAGE DEVIATION – measures how far the average variate differs from the mean.
Deviation – measure of how widely the individual variates in a population vary
3. STANDARD DEVIATION –
• Measures the differences between individual variates and the entire population by
taking the square root of the sum of the squared differences between each variate and
the mean of all the variates in the population divided by the number of variates in the
population
• Measures of how much the actual of a population or sample deviate from the mean

14. MULTI-MODAL – refers to when the distribution has two categories containing the same
number of observation.

15. NOMINAL LEVEL OF MEASUREMENT – refers to assignment of names or numbers to

categories where the names or numbers to categories have no mathematics meanings.
 PRACTICAL APPRAISAL MATHEMATICS

16. RATIO LEVEL MEASUREMENT – refers to the measures that incorporates both of the
mathematical properties already mentioned (order and equal intervals) and one additional property.

17. ORDINAL LEVEL MEASUREMENT is characterized with the most basic of mathematical
properties or order or scale points. It incorporates a rising order of inequality between categories
or scale points.

18. RHOMBUS – refers to a parallelogram whose angles are oblique and whose sides are equal.

19. SKEWNESS – is a measure of symmetry in a distribution or lack of symmetry. Positively

skewed distribution has no longer tail to the right and the mean is greater than the median which is
greater than the mode. Negatively skewed distribution has a longer tail to the left and the mode is
greater than the median which is greater than the mean.

20. MULTIPLE REGRESSION ANALYSIS – is performed with the same basic method as simple
linear regression, but the analysis is expanded to include more than one dependent variable.

21. OUTLIERS – are extreme values in data set. The mean, median and mode are all equal if the data
are not skewed.

22. A hectare of land contains 10,000 square meters.

One (1) square kilometer is equivalent to 0.386 square mile.
One (1) hectare is equivalent to 2.471 acres.
A hectometer is equivalent to 100 meters.

23. The mean of five house sales prices of P100,000, P75,000, P175,000, P200,000 and P150,000 is
P140,000. (P100T+P75T+P175T+P200T+P150T/5)

24. The house flooring has an area of 30 square meters. How many vinyl tiles are needed if the size
is 12 inches by 12 inches
Sol.12 inch – 1ft
1 ft – 0.3048 m
1 sq.m – 10.76 ft
30 sq.m × 10.76 ft/sq.m = 322.8
10.76 ft/sqm. = 323 vinyl tiles

25. The area of a right triangle with a height of 20 ft and a base of 6 ft is (Round-off your answer to
the nearest figure).
Solution:
Triangle = 1⁄2 (b x h) = 1⁄2 (6 x 20) = 120 sq. ft./10.76 sq. ft./sqm. = 60sqft

26. The area of rectangle with a base of 10 meters and a length of 20 meters is 200 sqm.

27. A regression fives the following information to estimate monthly rent of apartments.
Rent = 250 + (75 x rooms) + (25 x distance)
Where:
Rooms is the percent of students in the apartment building (0=0) percent, 1.00 = 100%)
Distance is the distance from the periphery of the campus
 PRACTICAL APPRAISAL MATHEMATICS

The rent for an apartment with 3 rooms, 100 percent students and 50 meters from campus would
be:
Solution: Rent
= 250 + (75 x 3) + (50 x 100%) + (25 x 50
= 250 + 2250 + 50 + 1250 = 1,775

28. A rectangle lot has an area of 1,000 sqms with 20 meters frontage. A 4-storey building was
constructed on the lot with a 3-meter setback on all sides at a cost of P28,000 per square meter.
Compute:
a. THE DEPTH OF THE LOT
Solution:
Lot Depth = Lot area = 1,000 sqm = 50 meters
Frontage 20 m

b. FLOOR OF THE BUILDING

Solution:
Building Area = (20m-6m) x (50m-6m) x 4 storey = 2,464 sqm

c. TOTAL COST OF THE BUILDING

Solution:
Building Cost = 2,464 sqm. @P28,000 = P68,992,000
 PRACTICAL APPRAISAL MATHEMATICS

Where:
S = (1 + i)n = S
n = number of paying period
i= Interest per period
FV = Future Value
PV = Present Value
PMT = Periodic Payment
g. FV = PV x S

h. PV = FV x 1
S
i. FV = PMT x s−1
i

j. PMT = FV x i
s−1

k. PV = PMT x s−1
sxi

l. PMT = PV x s x i
s−1

29. Your desired to have P50,000 five (5) years from now. How much should you deposit now (PV)
to have it with an interest rate at 10% per annum?
Formula: PV = FV x 1/S

PV = FV x 1/(1 + 10 = 1/1.276282 = 0.783526

¿¿5
PV = P50,000 x 0.783526 = P31,046
Note: Value factor can be used in property residual method, annuity and leased fee estate.

30. What is future value (FV) of P50,000 single deposit for 10 years earning and interest rate of 10%
compounded annually
Formula: FV = PV x S
FV = P50,000 x (1 + . 10 = 2.5937463
¿ ¿ 10
FV = P50,000 x 2.593743 = P129,687
Note: Value factor can be used in property residual method, annuity factors

31. If three (3) annual deposits of P50,000 each are placed in an bank account, how much money has
accumulated (FV) after the last deposit at 10% interest annually?
Formula: FV = PMT x S - 1/ i
FV = PMT x (1. 10 – 1/.10 = (1.331 – 1)/.10 = 3.31
¿¿3
FV = P50,000 x 3.31 = P165,500
 PRACTICAL APPRAISAL MATHEMATICS

32. How much money you are going to deposit annually (PMT) one equal amount in order to have
P50,000 on the 5th annual deposit with 10% interest annually?
Formula: PMT = FV x S - 1/ i
PMT = FV x .10/{(1. 10 – 1/.10 = (1.61051 – 1)=0.163797
¿¿5
PMT = P50,000 x 0.1637975 = P8,190

33. How much is the annual amortization (PMT) in 5 equal payment at 10% per annum in order to
repay the P50,000 loan?
Formula: PMT = PV x S i /(s – 1)
PMT = PV x (1. 10 x (0.10)/{(1. 10 – 1)}
¿¿5 ¿¿5

PMT = 1.61051 x {(0.10)/1.61051 – 1)}

PMT = 1.61051 x (0.10)/1.61051
PMT = 1.61051 x 0.163798 = 0.263798
PMT = P50,000 x 0.263798 = P13,190