Question

The subject is a 15 year old duplex that would cost $240,000 to build new today. It is in good condition and you estimate the effective age to be 10 years. Your estimate of total economic life is 50 years. Its land value is $60,000. What is its value by the cost approach?

Answer 1

Answer:

$242,000

Explanation:

If we use the cost approach to value this duplex home, we must add the cost of the land plus the cost of construction minus the home's depreciation:

property value = $60,000 + $240,000 - ($240,000 x 20%) = $60,000 + $240,000 - $48,000 = $242,000