Property Valuation
The principle of contribution in real estate valuation states that:
AAll improvements contribute equally to value
BThe value of a component is measured by its contribution to the whole, not its cost✓ Correct
CMarket participants always value improvements at their cost
DAdditions always increase value by at least their cost
Explanation
The principle of contribution states that the value of any component of a property is measured by the amount it contributes to the total value — not by what it cost to install. A $50,000 addition may only contribute $30,000 to the property's market value.
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