Question

Eight years ago, a 15,000 square foot warehouse cost $40.00 per sq. ft. to rebuild. Its economic life is 50 years. The land is valued at $170,000.00. Today, the property is valued at _.

Answer 1

The current value of the warehouse property is $674,000 when accounting for depreciation over eight years and adding the land value.

Step-by-step explanation:

Eight years ago, a 15000 square foot warehouse cost $40.00 per sq. ft. to rebuild, summing up to a total rebuilding cost of $600,000 (15000 sq. ft. × $40.00 per sq. ft.). Given an economic life of 50 years, we can calculate the annual depreciation as $600,000 ÷ 50 years = $12,000 per year. Over eight years, the accumulated depreciation would be $12,000 × 8 = $96,000. Subtracting this from the initial rebuilding cost gives us the depreciated building value of $600,000 - $96,000 = $504,000. Adding the land value of $170,000 to this, we get a total property value today of $504,000 + $170,000 = $674,000.