FinancingAppraisal_methodsMEDIUM
The cost approach to appraisal estimates value by:
Correct Answer
B) Calculating land value plus the cost to reproduce or replace the improvements, minus depreciation
The cost approach = land value + reproduction/replacement cost of improvements - depreciation. It is most reliable for new construction and special-purpose properties.
Answer Options
A
Comparing recent salesB
Calculating land value plus the cost to reproduce or replace the improvements, minus depreciationC
Capitalizing net incomeD
Using the tax-assessed valueWhy This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Financing Question
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Background Knowledge for Financing
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Real World Application in Financing
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Common Mistakes to Avoid on Financing Questions
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Related Topics & Key Terms
Related Topics:
sales comparison approachincome capitalization approachdepreciationreproduction costreplacement costappraisal methods
Key Terms:
cost approachreproduction costreplacement costdepreciationland valueappraisal
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