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?
A)$270,000
B)$370,000
C)$430,000
D)$530,000

Question

Quizplus · Accepted Answer

The cost approach to valuation is calculated as: Reproduction cost of the building - Accrued depreciation + Added value of the site.

In this case: 
Market value of property = $400,000 
Added value of the site = $80,000 
Accrued depreciation = $50,000

Reproduction cost of the building can be calculated as: 
Market value of property = Reproduction cost of the building - Accrued depreciation + Added value of the site

$400,000 = RC - $50,000 + $80,000 
$400,000 = RC + $30,000 
RC = $370,000

Therefore, the reproduction cost of the building is $370,000, so the best choice is B.

Suppose That an Appraiser Has Just Completed Her Analysis Using