Which appraisal method estimates value by calculating the cost to replace the improvements, subtracting depreciation, and adding the land value?

Correct Answer

B) Cost approach, which uses replacement cost minus depreciation plus land value

The cost approach estimates value using the formula: Replacement (or Reproduction) Cost of Improvements − Accrued Depreciation + Land Value. It is most useful for new construction, special-purpose properties (such as schools and churches), and insurance valuations where comparable sales data is limited.