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Cost ApproachHARD13.6% of exam

A house lacks a second bathroom. Adding one now would cost $14,000; including it during construction would have cost $9,000. What functional obsolescence does the deficiency represent?

Correct Answer

A) $5,000

Why this is correct: the obsolescence is the penalty for adding it late rather than the whole cost of adding it, because a bathroom built on time would have cost money too. Calculation: $14,000 - $9,000 = $5,000. Why the other choices are wrong: $14,000 charges the property for the entire addition; $9,000 is what it would have cost if no deficiency existed; $23,000 sums both figures.

Answer Options
A
$5,000
B
$9,000
C
$23,000
D
$14,000

Why This Is the Correct Answer

Why this is correct: the obsolescence is the penalty for adding it late rather than the whole cost of adding it, because a bathroom built on time would have cost money too. Calculation: $14,000 - $9,000 = $5,000. Why the other choices are wrong: $14,000 charges the property for the entire addition; $9,000 is what it would have cost if no deficiency existed; $23,000 sums both figures.

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