Property Valuation
A property's land-to-building value ratio is important in the cost approach because:
AThe land value must be determined separately since land does not depreciate✓ Correct
BHigher land value reduces the property's overall value
CBuilding value always exceeds land value
DLand depreciation is calculated at 2% per year
Explanation
In the cost approach, land is valued separately (it does not depreciate) and the structure's depreciated cost is added. Only improvements depreciate; land value is estimated independently.
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