Laying ceramic tile on uneven floor

we plan to lay ceramic tile in a particular room (an addition to the house). we've got the tile, we've got 1/4" backerboard, we've pulled up the carpets. now i find that the floor is quite uneven in some places. In particular, there is a vertical drop of about an inch over three horizontal feet toward one wall. this drop extends the length of the floor.
presumably this is not acceptable to put tile on. any suggestions? will i have to build up the floor along that wall?
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are t hey , loose rotted, replace wood or use floor level compound
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