Owner converted master bedroom into 'granny flat' costing $50,000 but adding $30,000 value. Later, kitchen remodel cost $15,000 but added $20,000 value. Which statement is correct?

Correct Answer

D) None above statements are correct

Answer D is correct because none of the other statements accurately describe the scenarios presented. The granny flat conversion illustrates decreasing returns (cost $50,000, added only $30,000 in value — a net loss of $20,000), while the kitchen remodel illustrates increasing returns (cost $15,000 but added $20,000 in value — a net gain of $5,000). Answer A incorrectly labels both as decreasing returns, Answer B incorrectly applies the concept of progression (a neighborhood effect, not an investment return concept), and Answer C incorrectly applies regression (also a neighborhood concept), making D the only accurate choice.