Property Valuation
The principle of contribution in real estate valuation states that:
AThe value of a component equals its cost to install
BThe value of a component is measured by what it contributes to the overall property value, not its cost✓ Correct
CAll improvements contribute equally to value
DImprovements always add more value than they cost
Explanation
The principle of contribution says the value of any component is what it adds to the whole property's value. Adding a fourth bedroom to a two-bedroom house adds more than adding a fifth to a four-bedroom.
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