How is land value (LV) calculated when given a sale price (SP) and a land to building ratio (L-BR) of 1-4?

The calculation of land value in relation to the sale price and the land to building ratio is based on the understanding of the relationship between the land and the building portion of the property. The land to building ratio of 1-4 indicates that for every one unit of land, there are four units of building value.

The correct method to find the land value involves dividing the sale price by the total of the land to building ratio parts. Since the ratio is 1-4, this means that the total "parts" are 1 (land) + 4 (building) = 5 parts. Therefore, to find the land value, you would divide the sale price by the total number of parts, which gives the value of one part. Multiplying the value of one part by the land portion (1 part), you can determine the land value.

The given response that suggests multiplying the sale price by 0.20 might reflect an interpretation of the ratio, but it does not correctly follow the specific steps necessary to yield the exact land value based on the provided ratio and sale price. Instead, the correct method is to recognize how to balance the sale price against the land to building ratio effectively.