ValuationAppraisal_methodsMEDIUM
The cost approach to appraisal estimates value by calculating:
Correct Answer
B) Replacement cost minus depreciation plus land value
The cost approach estimates value by calculating the cost to replace the improvements (replacement cost), subtracting accrued depreciation, and then adding the value of the land. The formula is: Value = Replacement Cost - Depreciation + Land Value.
Answer Options
A
Recent comparable sales pricesB
Replacement cost minus depreciation plus land valueC
Net operating income divided by cap rateD
Assessed value multiplied by 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:
depreciation typesreplacement cost vs. reproduction costland valuesales comparison approachincome approach
Key Terms:
cost approachreplacement costdepreciationland valuespecial-purpose property
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