Property Valuation
The cost approach formula is: Value = Land Value + (Cost New − Depreciation). If land value is $80,000, cost new is $250,000, and total depreciation is $40,000, what is the estimated value?
A$290,000✓ Correct
B$250,000
C$210,000
D$330,000
Explanation
Value = $80,000 + ($250,000 − $40,000) = $80,000 + $210,000 = $290,000. Using the values given ($80,000,, $250,000,), apply the appropriate formula..
People Also Study
Related Tennessee Questions
- A Chattanooga home's market value is $275,000. The replacement cost of improvements is $230,000, the lot value is $55,000, and total depreciation is $30,000. What is the cost approach value?Property Valuation
- What is the annual depreciation on a residential income property purchased for $280,000 (land value $30,000) using IRS straight-line depreciation over 27.5 years?Real Estate Math
- A Tennessee buyer uses the following closing cost formula: Down payment 20% + 3% in closing costs on the loan amount. If the purchase price is $375,000, what is the total cash needed at closing?Real Estate Math
- In the cost approach to value, 'depreciation' is best defined as:Property Valuation
- In Tennessee, an appraiser estimates a property's value is $285,000 via the sales comparison approach and $292,000 via the cost approach. The final reconciled value will be:Property Valuation
- A Tennessee investor is looking at a 6-unit apartment building. Each unit rents at $725/month. Using a GRM of 110, what is the estimated market value?Real Estate Math
- In Tennessee, an appraiser who values land separately from improvements is most likely using the:Property Valuation
- A Memphis rental home has monthly gross income of $1,800 and monthly expenses of $750. Using a 10% cap rate, what is the property's estimated value?Real Estate Math
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
Study This Topic
Practice More Tennessee Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Tennessee Quiz →