Problem solving questions; (Demonstrate your calculation steps to receive partia
ID: 2657327 • Letter: P
Question
Problem solving questions; (Demonstrate your calculation steps to receive partial credit)
P3 (10 points): Using the given information to estimate the property value through Cost Approach
Cost Approach
Reproduction Costs
Assumptions
House
• Living area:2960 sf
Garage
• Living area, estimated cost of reproduction: $62.00 / sf
Appliances
• Garage, estimated cost of reproduction: $8,800
Total Reproduction
• Appliances, estimated cost of reproduction: $2,400
Depreciation
• Physical depreciation: 5% of total improvement costs
Depreciated Cost of Building
• Functional obsolescence: None
Site Value
• External obsolescence: None
Misc Site Improvements
• Site value, estimated: $40,000
Total Value
• Landscaping and other miscellaneous site improvements,
current value: $4,000.
Cost Approach
Reproduction Costs
Assumptions
House
• Living area:2960 sf
Garage
• Living area, estimated cost of reproduction: $62.00 / sf
Appliances
• Garage, estimated cost of reproduction: $8,800
Total Reproduction
• Appliances, estimated cost of reproduction: $2,400
Depreciation
• Physical depreciation: 5% of total improvement costs
Depreciated Cost of Building
• Functional obsolescence: None
Site Value
• External obsolescence: None
Misc Site Improvements
• Site value, estimated: $40,000
Total Value
• Landscaping and other miscellaneous site improvements,
current value: $4,000.
Explanation / Answer
Reproduction cost
House= 2960*$62 = 183520
Garage= 8800
Appliances= 2400
Total reproduction = 194720
Add: Improvement costs:
Site improvement = 40000
Landscaping = 4000
Total improvement = 44000
Less: depreciation = 5%*44000 = 2200
Net improvement cost = 41800
Total Value= 194720+41800 =236520
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.