Real Estate Math
A New Mexico appraiser values a property using the cost approach: land value $80,000, building replacement cost $290,000, accrued depreciation $58,000. What is the indicated value?
A$290,000
B$312,000✓ Correct
C$232,000
D$370,000
Explanation
Value = Land + (Replacement Cost - Depreciation) = $80,000 + ($290,000 - $58,000) = $80,000 + $232,000 = $312,000.
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Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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