Question

A property is being appraised by the cost approach. The appraiser estimates that the land is worth $30,000 and the replacement cost of the improvements is $95,000. Total depreciation from all causes is $10,000. What is the indicated value of the property?

1.$135,000.
2.$130,000.
3.$125,000.
4.$115,000.

Answer 1

The indicated value of the property is $115,000.

Step-by-step explanation:

The indicated value of the property can be determined by subtracting the total depreciation from the replacement cost of the improvements, and then adding the value of the land. In this case, the replacement cost is $95,000 and the total depreciation is $10,000. So, the value of the improvements after depreciation is $95,000 - $10,000 = $85,000. Adding the value of the land, which is $30,000, we get a total indicated value of $85,000 + $30,000 = $115,000.