Question

A property is being appraised by the cost approach. The appraiser estimates that the land is worth $17,000 and the replacement cost of the improvements is $235,000. Total depreciation from all causes is $23,000. What is the indicated value of the property

Answer 1

Answer:

The indicated value of the property amounts to $229,000

Explanation:

Indicated value is the bottom line which is appraisal opinion of the present value of the property after the reconciliation of all the approaches as well as methods to appraising the property.

The indicated value of the property is computed as:

Indicated value = Replacement cost - (Depreciation - Land worth)

where

Replacement cost is $235,000

Depreciation is $23,000

Land worth is $17,000

Putting the values above:

Indicated value = $235,000 - ($23,000 - $17,000)

Indicated value = $235,000 - $6,000

Indicated value = $229,000

Therefore, the indicated value of the property amounts to $229,000