Property Valuation
A Minnesota appraiser is completing a cost approach appraisal. The replacement cost of the improvements is $280,000. Depreciation is estimated at 25%. The land value is $65,000. What is the indicated value?
A$275,000✓ Correct
B$265,000
C$285,000
D$270,000
Explanation
Depreciated improvement value = $280,000 x (1 - 0.25) = $280,000 x 0.75 = $210,000. Total value = $210,000 + $65,000 = $275,000. The cost approach is especially useful for new construction or special-use properties in Minnesota where comparable sales are limited.
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