Question

Replacement costs have been estimated as $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 $55,000. What is the estimated market value of the property using the cost approach?

Answer 1

Answer: The estimated market value of the property using the cost approach is $330000

Explanation: The first step is to determine the value of the reproduction, which is equal to $ 350000.

Then we must subtract its accumulated depreciation, which is calculated as follows: ( (350000 x 15) / 70 ) = $ 75000.

350000 - 75000 = 275000

And last step we must add the estimated value of the site that is $ 55000.

275000 + 55000 = $ 330000 is the value estimated by the cost approach.