Under the replacement cost approach of appraisal, an appraiser is least interested in:
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depreciation.
the original cost to buil
B is incorrect because the original cost to build is directly relevant to the cost approach as it forms the basis of calculating replacement cost, which is a fundamental component of this valuation method.
the effective age of the property.
C is incorrect because the effective age of the property helps determine the amount of depreciation, which is subtracted from the replacement cost to arrive at the depreciated value of the improvements.
d. the value of the land. Simulated Exam #2 213
D is incorrect because the value of the land is essential to the cost approach formula: Replacement Cost - Depreciation + Land Value. Land value is added because it doesn't depreciate and is a separate component from the improvements.
Why is this correct?
A is correct because depreciation is actually a critical factor in the cost approach - it's subtracted from the replacement cost, not ignored. The appraiser must carefully calculate depreciation to arrive at an accurate value. The question's wording is misleading as it asks what they're 'least interested in' when depreciation is actually essential to the calculation.
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