Page 1 of 28
Property Valuation Methods Exam 2026–2027
| Comprehensive Question Practice Test with
Answers & Rationales| Free Pdf Access
1. In insurance, “Actual Cash Value” (ACV) is most commonly
defined as:
a) Market value
b) Replacement cost minus depreciation
c) Original purchase price
d) Assessed tax value
Answer: b) Replacement cost minus depreciation
Rationale: ACV = replacement cost – physical depreciation and
functional obsolescence. Some states use “fair market value” but
insurance standard is cost minus depreciation.
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2. Replacement cost is defined as:
a) The cost to rebuild with like kind and quality at current prices
b) The original construction cost
c) The depreciated value of the building
d) The sale price of a comparable property
Answer: a) The cost to rebuild with like kind and quality at
current prices
Rationale: No deduction for depreciation; uses current labor and
material costs.
3. True or False: Market value and replacement cost are always
identical.
Answer: False
Rationale: Market value includes land value and location
factors; replacement cost may be higher or lower.
, Page 3 of 28
4. Which approach to value is most relevant for a unique
property with no comparables?
a) Income approach
b) Sales comparison approach
c) Cost approach
d) Stock market approach
Answer: c) Cost approach
Rationale: Cost approach estimates replacement cost minus
depreciation plus land value.
5. The “modified” cost approach for insurance valuation:
a) Ignores land value
b) Includes land value for ACV calculation
c) Uses historical cost
d) Only for commercial property
Property Valuation Methods Exam 2026–2027
| Comprehensive Question Practice Test with
Answers & Rationales| Free Pdf Access
1. In insurance, “Actual Cash Value” (ACV) is most commonly
defined as:
a) Market value
b) Replacement cost minus depreciation
c) Original purchase price
d) Assessed tax value
Answer: b) Replacement cost minus depreciation
Rationale: ACV = replacement cost – physical depreciation and
functional obsolescence. Some states use “fair market value” but
insurance standard is cost minus depreciation.
,Page 2 of 28
2. Replacement cost is defined as:
a) The cost to rebuild with like kind and quality at current prices
b) The original construction cost
c) The depreciated value of the building
d) The sale price of a comparable property
Answer: a) The cost to rebuild with like kind and quality at
current prices
Rationale: No deduction for depreciation; uses current labor and
material costs.
3. True or False: Market value and replacement cost are always
identical.
Answer: False
Rationale: Market value includes land value and location
factors; replacement cost may be higher or lower.
, Page 3 of 28
4. Which approach to value is most relevant for a unique
property with no comparables?
a) Income approach
b) Sales comparison approach
c) Cost approach
d) Stock market approach
Answer: c) Cost approach
Rationale: Cost approach estimates replacement cost minus
depreciation plus land value.
5. The “modified” cost approach for insurance valuation:
a) Ignores land value
b) Includes land value for ACV calculation
c) Uses historical cost
d) Only for commercial property
