Property Valuation
An Iowa appraiser is comparing three buildings using the cost approach. The reproduction cost differs from replacement cost in that:
AThey are the same concept and may be used interchangeably
BReproduction cost estimates the cost to replicate the exact building; replacement cost estimates the cost to build a modern functional equivalent✓ Correct
CReplacement cost is always lower than reproduction cost
DReproduction cost is used only for historic buildings
Explanation
Reproduction cost is the cost to build an exact duplicate using the same materials and methods. Replacement cost is the cost to build a modern functional equivalent using current materials and standards. Replacement cost is more commonly used.
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