ValuationAppraisal MethodsMEDIUM
The cost approach to appraisal estimates value by calculating which of the following?
Correct Answer
B) Replacement cost of improvements minus depreciation plus land value
The cost approach estimates value by calculating the cost to replace or reproduce the improvements, minus accrued depreciation, plus the value of the land. It is most useful for unique properties, new construction, or special-use properties where comparable sales are limited.
Answer Options
A
Recent comparable sales prices adjusted for differencesB
Replacement cost of improvements minus depreciation plus land valueC
Net operating income divided by the capitalization rateD
Assessed value multiplied by the local tax rateWhy This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Valuation Question
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Background Knowledge for Valuation
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Real World Application in Valuation
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Common Mistakes to Avoid on Valuation Questions
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Related Topics & Key Terms
Related Topics:
sales comparison approachincome approachdepreciation in appraisalUSPAP standardsland valuation
Key Terms:
cost approachreplacement costdepreciationland valueappraisal methods
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