Question

An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 75%. What is the land value?

Answer 1

$287,500

Explanation:

Data provided in the question:

Amount for which the old gas station was sold = $375,000

The reproduction cost of the improvements today = $350,000

Total depreciation = 75%

Now,

Amount of depreciation = 75% of $350,000

= 0.75 × $350,000

= $262,500

therefore,

The Remaining value = $350,000 - $262,500

= $87,500

Thus,

The land value = $375,000 - $87,500

= $287,500

Answer 2

The land value is : $287,500

Explanation:

An old gas station on a good corner location is sold for $375,000.

The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 75%.

The remaining value of the building =
`350000*0.25` = $87,500

So, the land value is =
`375000-87500` = $287,500