Property Valuation
A Colorado appraiser applies a 20% cost-to-cure estimate to a deferred maintenance item. The repair cost is $5,000. What profit/entrepreneurial incentive has the appraiser built in?
A$500
B$1,000✓ Correct
C$1,200
DNo incentive — the full repair cost is deducted
Explanation
A 20% cost-to-cure estimate on a $5,000 repair = $5,000 × 20% = $1,000 additional depreciation beyond the repair cost itself, representing the entrepreneurial incentive for completing the repairs and the time value of having to do so.
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