Property Valuation
In the cost approach, the cost to construct a new building is estimated at $2,200,000. The appraiser determines accrued depreciation of 35%. The land value is $400,000. What is the indicated value using the cost approach?
A$1,830,000✓ Correct
B$1,430,000
C$2,600,000
D$1,630,000
Explanation
Depreciated building value = $2,200,000 × (1 – 0.35) = $2,200,000 × 0.65 = $1,430,000. Total cost approach value = $1,430,000 + $400,000 (land) = $1,830,000.
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