All of the following statements about the cost approach are generally true EXCEPT:
Correct Answer
B) Physical deterioration is the loss in value caused by outside factors such as traffic and nearby industry
Choice D is the false statement, so it is the EXCEPT answer. Outside factors such as traffic, nearby industry, or adverse neighboring land use are examples of external obsolescence, not physical deterioration.
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Each of the following is generally an example of external obsolescence EXCEPT:
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On a November 2026 assignment, a home's replacement cost new is $350,000 and site value is $90,000. The appraiser estimates physical deterioration at 10% of the improvements and functional obsolescence at $15,000, with no external obsolescence. What indicated value does the cost approach produce?