Real Estate Math
A South Dakota property costs $180,000 to replace if destroyed. Land value is $30,000. Depreciation on the building is 20%. What is the value using the cost approach?
A$150,000
B$174,000✓ Correct
C$147,900
D$180,000
Explanation
Building depreciation = $180,000 × 20% = $36,000. Depreciated building value = $180,000 − $36,000 = $144,000. Total value = $144,000 + $30,000 land = $174,000.
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