ValuationAppraisal MethodsMEDIUM
Which formula correctly describes the cost approach to appraisal?
Correct Answer
B) Replacement cost of improvements minus depreciation, plus land value
The cost approach estimates value by calculating the replacement cost of the improvements (structures), subtracting accrued depreciation, and then adding the estimated land value. It is most useful for new construction, special-use properties, and properties with few comparable sales.
Answer Options
A
Adjusted sale prices of comparable properties averaged togetherB
Replacement cost of improvements minus depreciation, plus land valueC
Net operating income divided by the capitalization rateD
Assessed value multiplied by the local tax levy rateWhy This Is the Correct Answer
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Related Topics & Key Terms
Related Topics:
depreciation
Key Terms:
cost
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