Property Valuation
In New Mexico, what is the primary difference between 'reproduction cost' and 'replacement cost' in the cost approach?
AThey are identical terms
BReproduction cost = cost to build an exact duplicate; replacement cost = cost to build a functionally equivalent building with modern materials✓ Correct
CReproduction cost is always higher
DReplacement cost uses historical cost data
Explanation
Reproduction cost estimates the cost to build an exact replica using the same materials and methods. Replacement cost uses modern materials and techniques to create an equally functional building—the more commonly used concept.
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