Property Valuation
The remaining economic life of a building is used in the cost approach to:
ADetermine the market value of the land
BCalculate accrued depreciation✓ Correct
CEstimate the cap rate for the property
DDetermine the appropriate GRM
Explanation
Remaining economic life (REL) is used in conjunction with total economic life to calculate the age-life ratio of accrued depreciation. For example, if a building has a 50-year economic life and is effectively 20 years old, 40% of its value has depreciated (20/50).
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