A property has a reproduction cost of $400,000, land value of $150,000, and total depreciation of $75,000. What is the property value using the cost approach?
Correct Answer
A) $475,000
Cost Approach Value = Land Value + (Reproduction Cost - Depreciation) = $150,000 + ($400,000 - $75,000) = $150,000 + $325,000 = $475,000. The cost approach adds land value to the depreciated reproduction cost of improvements.
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Previous Question
A property has a land value of $300,000 and replacement cost of $450,000. Physical depreciation is estimated at $50,000, functional obsolescence at $30,000, and external obsolescence at $20,000. What is the property's estimated value using the cost approach?
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A property sold for $450,000 and generates annual net operating income of $27,000. What is the capitalization rate?