Real Estate Math
An appraisal of a Redmond office building shows: replacement cost $3,800,000; land value $800,000; accrued depreciation $950,000. What is the indicated value using the cost approach?
A$3,650,000✓ Correct
B$4,600,000
C$2,850,000
D$3,050,000
Explanation
Depreciated building value = Replacement cost – Depreciation = $3,800,000 – $950,000 = $2,850,000. Total cost approach value = $2,850,000 + $800,000 (land) = $3,650,000.
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