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Cost ApproachMEDIUM13.6% of exam

Which depreciation category arises from adverse influences outside the property that an individual owner generally cannot correct?

Correct Answer

C) External obsolescence

External obsolescence originates in adverse influences outside the property and is generally beyond an individual owner’s control. It can be temporary and may affect site and improvements. It is not ordinary component wear or an internal layout deficiency.

Answer Options
A
Physical deterioration of short-lived components
B
Physical deterioration from deferred maintenance
C
External obsolescence
D
Functional obsolescence from an internal layout

Why This Is the Correct Answer

External obsolescence originates in adverse influences outside the property and is generally beyond an individual owner’s control. It can be temporary and may affect site and improvements. It is not ordinary component wear or an internal layout deficiency.

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