Question

Suppose that an appraiser has just completed her analysis using the cost approach to valuation. She has determined that the market value of the subject property is $400,000. If the added value of the site was $80,000 and accrued depreciation amounted to $50,000, what was the reproduction cost of the building?

Answer 1

Answer:

$370,000

Explanation:

The computation of the reproduction cost of the building is shown below:

= Market value of the subject property + accrued depreciation  - the added value of the site

= $400,000 + $50,000 - $80,000

= $370,000

We simply added the accrued depreciation expense and deducted the added value of the site from the market value of the subjected property so that the accurate value can come.