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?
Correct Answer
B) $390,000
Step 1: Physical deterioration is $350,000 × 10% = $35,000. Step 2: Total depreciation is $35,000 + $15,000 = $50,000. Step 3: Depreciated improvement value is $350,000 - $50,000 = $300,000. Step 4: Add site value of $90,000 to reach $390,000.
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