An appraiser in Miami is using the cost approach to value a 5-year-old commercial building. The replacement cost new is $850,000, the land value is $200,000, and the total depreciation is estimated at $75,000. What is the indicated value using the cost approach?
Correct Answer
A) $975,000
Cost approach value = Land Value + (Replacement Cost New - Depreciation) = $200,000 + ($850,000 - $75,000) = $975,000. Option B incorrectly adds depreciation instead of subtracting it. Option C omits the land value. Option D incorrectly calculates the building value.
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