Real Estate Math
A Kentucky property appraiser uses the cost approach. The land value is $40,000 and the building replacement cost is $220,000. Physical depreciation is 15%. What is the indicated value?
A$207,000
B$220,000
C$227,000✓ Correct
D$260,000
Explanation
Depreciated building value = $220,000 × (1 − 0.15) = $220,000 × 0.85 = $187,000. Total value = $40,000 (land) + $187,000 = $227,000.
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