Property Valuation
The cost approach to value estimates a property's value by:
AComparing the property to recent sales of similar properties
BDividing the net operating income by the capitalization rate
CEstimating the cost to reproduce or replace the improvements minus depreciation, plus land value✓ Correct
DCalculating the gross rent multiplier times the annual rent
Explanation
The cost approach estimates value by calculating: land value + cost new of improvements − accrued depreciation. It is most useful for unique properties, new construction, and special-purpose buildings where sales comparables are limited.
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