Property Valuation
A New Mexico appraiser uses the 'cost approach' to value a 10-year-old commercial building. The first step is to estimate:
ANet operating income
BThe cost to replace or reproduce the improvements as if new✓ Correct
CThe sales price of comparable properties
DThe land value alone
Explanation
In the cost approach: (1) estimate land value separately, (2) estimate replacement/reproduction cost new of improvements, (3) subtract accrued depreciation from all causes, (4) add land value to get total property value.
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