COST APPROACH

COST APPROACH EXAM QUESTIONS WITH ANSWERS the COST APPROACH involves_____ and is based on the______ -Involves estimation of reproduction or replacement cost of a property less accrued depreciation. - Based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. Reliability is affected by: (2 things). and is especially applicable to: 1) reproduction or replacement cost data. 2) es...

COST APPROACH EXAM QUESTIONS WITH ANSWERS Three Economic Principles Substitution Contribution Balance Substitution Appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution *primary principle of cost and sales approach Contribution Relates to the concept that the value of a particular component is measures in terms of its contribut...

Cost Approach to Valuation Test Exam Replacement costs have been estimated at $350,000 for a property with a 70 year economic life. The current effective age of the property is 15 years. The value of the land is estimated to be $55,000. What is the estimated market value of the property using the cost approach, assuming no external or functional obsolescence? replacement cost: 350,000 less: depreciation (75,000) [350,000x15/70] depreciated cost of building improvements 275,000 add: es...

Chapter 11 - The cost approach exam Main focus of cost approach Objective value Subsitution A prudent buyer will pay no more for a property than the cost of producing or creating an equally desirable property, providing no delay occurs in making the substitution. Step 1 of the cost approach Estimate the value of the site. Step 2 of the cost approach Estimate the replacement cost on the effective date of the appraisal. Reproduction cost may be used in selected circumstances. ...

Ch.5 Cost Approach - Cost Estimating Exam The four methods of estimating the ____________________/______________________ cost of a structure will be demonstrated with examples. They include: Index method Comparative-unit method Unit-in-place method Quantity survey method reproduction, replacement The basic principle underlying the ________ approach is the principle of __________________ cost, substitution the principle of _______________________: "The appraisal principle that...