A property sold for $375,000. The reproduction cost of the building was $600,000 and its estimated deprecation was 70%.
By extraction, the value of the land will be:
<u>$195,000</u>
600,000 - (.7 * 600,000) = 180,000
375,000 - 180,000 = 195,000
According to current rates, reproduction cost is the cost associated with identically duplicating an asset or property using the same materials and specifications as an insured property. For insurance reasons, reproduction costs are an estimate of what it would cost to replicate a damaged or lost item or piece of property exactly and according to specifications.
Reproduction cost, which considers the cost of replacing an insured property with one that functions similarly, is distinct from reproduction cost, which considers the cost of making an identical replica.
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