ValuationAppraisal MethodsMEDIUM
Which formula best represents the cost approach to appraisal?
Correct Answer
B) Replacement cost minus depreciation plus land value
The cost approach to appraisal estimates property value by calculating the replacement cost of the improvements, subtracting accrued depreciation, and then adding the value of the land. The formula is: Value = Replacement Cost − Depreciation + Land Value.
Answer Options
A
Adjusted sales price of comparable propertiesB
Replacement cost minus depreciation plus land valueC
Net operating income divided by capitalization rateD
Assessed value multiplied by tax rateWhy This Is the Correct Answer
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Related Topics & Key Terms
Related Topics:
depreciationland valuereplacement costreproduction costspecial-use properties
Key Terms:
cost approachreplacement costdepreciationland valueappraisal formula
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