Property Valuation
In South Dakota, 'reproduction cost' versus 'replacement cost' in the cost approach means:
AThey are identical for appraisal purposes
BReproduction cost is the cost to build an exact replica; replacement cost is the cost to build a building with the same utility using current materials and methods✓ Correct
CReplacement cost is always higher than reproduction cost
DReproduction cost uses current materials; replacement cost uses historical materials
Explanation
Reproduction cost is the cost to construct an exact duplicate of the subject building using the same materials, methods, and design. Replacement cost is the cost to construct a building of equivalent utility using current construction methods and materials. Appraisers typically use replacement cost to avoid valuing obsolete features.
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