Site Valuation and Cost Approach - Math Flashcards
1.69 acres contains how many square feet?
73,616
16 lots sold in a year. What is the absorption rate per month?
- 1.25
- 1.33
- 12
- 16
1.33
18 lots sold in a year. What is the absorption rate per month?
- 1.25
- 1.5
- 12
- 18
1.5
2.19 acres contains how many square feet?
- 75775
- 82024
- 95396
- 97912
95396
20 lots sold in a year. What is the absorption rate per month?
- 1.25
- 1.33
- 1.67
- 20
1.67
20 lots sold in a year. What is the absorption rate per month?
- 20
- 1.67
- 1.33
- 1.25
1.67
25 Links = ___ Feet
25 Links = 16 1/2 Feet
3.54 acres contains how many square feet?
- 133589
- 154202
- 164214
- 187443
154202
30 lots sold in a year. What is the absorption rate per month?
- 2
- 2.5
- 3
- 3.5
2.5
72 lots sold in 2 years. What is the absorption rate per month?
- 36
- 12
- 3
- 2.4
3
A 25-year-old building would cost $2,750,000 to build new today. It is in good condition and you estimate the effective age to be 20 years. Your estimate of total economic life is 50 years, based on the experience of similar properties. By an Age-life method, how much depreciation has accrued?
- 1650000
- 1375000
- 1100000
- 750000
1100000
A 30-year-old building would cost $1,000,000 to build new today. It is in good condition and you estimate the effective age to be 20 years. Your estimate of total economic life is 45 years, based on the experience of similar properties. By an Age-life method, how much depreciation has occurred?
- 222222
- 333333
- 444444
- 666667
444444
A 40-year-old building would cost $6,345,000 to build new today. It is in good condition and you estimate the effective age to be 25 years. Your estimate of total economic life is 45 years, based on the experience of similar properties. By an Age-life method, what percent depreciation has accrued?
- 40
- 45
- 56
- 60
56
A building has a replacement cost of $1,300,000. Deferred maintenance items total $40,000 and the total cost new of the short-lived items is $250,000. If we estimate the total useful life to be 50 years and the actual age of the building is 20 years, how much is the long-lived depreciation?
- 334500
- 355000
- 389000
- 404000
404000
A building has a replacement cost of $2,400,000. Deferred maintenance items total $40,000 and the total cost new of the short-lived items is $350,000. If we estimate the total useful life to be 50 years, and the actual age of the building is 20 years, how much is the long-lived depreciation?
- 634500
- 755000
- 789000
- 804000
804000
A building has a replacement cost of $2,450,000. Deferred maintenance items total $125,000 and the total cost new of the short-lived items is $450,000. If we estimate the total useful life to be 50 years and the actual age of the building is 18 years, how much is the long-lived depreciation?
- 634500
- 705000
- 759000
- 675000
675000
A building has a total calculated cost from the MVS of $63.65 per square foot and it contains three stories that each have 3,500 square feet. The local multiplier is 1.16 and the current cost multiplier is 1.02. What is the indicated total cost for the building?
- 688245
- 790762
- 812370
- 838882
790762
A building has a total calculated cost from the MVS of $71.24 per square foot and it contains four stories that each have 4,500 square feet. The local multiplier is 1.02 and the current cost multiplier is 1.13. What is the indicated total cost for the building?
- 1388346
- 1399354
- 1412688
- 1478002
1478002
A building measures 125 x 175 feet. How many lineal feet is that?
- 300
- 450
- 600
- 21875
600
A building measures 130 x 195 feet. How many lineal feet is that?
- 300
- 450
- 650
- 21875
650
A building measures 90 x 180 feet. How many lineal feet is that?
- 300
- 450
- 540
- 16200
540
A commercial building would cost $2,800,000 to build new. It is 8 years old and has sustained depreciation of 1.5% per year. It is on a 6.4 acre lot worth $40,000 per acre. What is its value by the Cost Approach?
- 2530000
- 2625000
- 2720000
- 2890000
2720000
A commercial building would cost $3,200,000 to build new. It is 10 years old, and has sustained a total of 25% depreciation. It is on a lot worth $1,250,000. What is its value by the Cost Approach?
- 2780000
- 2945000
- 3650000
- 3155000
3650000
A commercial building would cost $3,200,000 to build new. It is 10 years old and has sustained a total of 20% depreciation. It is on a lot worth $1,250,000. What is its value by the Cost Approach?
- 2780000
- 2945000
- 3810000
- 3155000
3810000
A commercial building would cost $6,600,000 to build new. It is six years old and has sustained depreciation of 1.5% per year. It is on a lot worth $900,000. What is its value by the cost approach?
- 6860000
- 6906000
- 6934000
- 6958000
6906000
A commercial lot sold for $180,000. It had 85 feet of frontage and a depth of 145 feet. What did it sell for per square foot?
- 12.9
- 13.44
- 14.6
- 15.2
14.6
A construction contract for a three story building that was 65 x 250 feet indicated a total cost of $3,950,000. What was the cost per square foot?
- 78.45
- 80.11
- 81.03
- 84.9
81.03
A construction contract for a three-story building that was 45 x 220 feet indicated a total cost of $3,360,000. What was the cost per square foot?
- 97.34
- 101.86
- 106.66
- 113.12
113.12
A construction contract for a two-story building that was 60 x 180 feet indicated a total cost of $1,820,000. What was the cost per square foot?
- 84.26
- 86.12
- 87.07
- 89.29
84.26
A farmer owns 8 full sections, 3 half sections, and 3 quarter sections. How many acres is that?
- 4850
- 6560
- 7480
- 8880
6560
A land parcel of 132.8 acres sold for $718,000. What did it sell for per acre?
- 5407
- 5513
- 5690
- 5728
5407
A land parcel of 91.2 acres sold for $775,000. What did it sell for per acre?
- 6923
- 7412
- 7857
- 8498
8498
A lot contains 108,900 square feet. How many acres is that?
- 1.44
- 1.89
- 2.33
- 2.5
2.5
A lot measures 217.48 feet by 324.89 feet. It sold for $235,000. How much did it sell for per acre?
- 127935
- 133853
- 145062
- 168901
145062
A lot measures 414.25 feet by 217.99 feet. It sold for $450,000. How much did it sell for per acre?
**$217,391
Area Calculations, 414.25 X 217.99 = 90,302 square feet. 90,302 ÷ 43,560 = 2.07 acres. $450,000 divided by 2.07 = $217,391 per acre.**
A lot measures 414.25 feet by 217.99 feet. It sold for $450,000. How much did it sell for per acre?
- 127935
- 217391
- 222613
- 155240
217391
A Nationwide Permit is required for developing projects impacting as little as _____acre of wetlands.
- 1
- 2
- 1/2
- 1/10
1/2
Permits are now required for projects impacting as little as one-half-acre of wetlands, and notification to the Corps is required for an impact as low as 1/10 acre.
A one-story building measuring 120 x 180 was constructed in September 1999 at a cost of $95.25 per square foot. The index for September 1999 was 119.6 and the current index is 202.8. What would be the current cost to construct the building using the cost indexing method?
- 3497580
- 3533490
- 3687856
- 3861305
3497580
A pad site for a fast-food franchise has a contracted monthly ground rent of $3,500 with a 5-year lease. The market rent is $4,000 per month. The market derived cap rate is 11%. What is the fee simple market value of the land by the Ground Rent Capitalization method?
- 381818
- 414854
- 436364
- 555239
436364
A property has an NOI of $270,000. The building value is $2,400,000 and the building cap rate is 9%. The land cap rate is 6%. What is the value of the land by the Land Residual method?
- 600000
- 900000
- 1100000
- 1250000
900000
A property has an NOI of $460,000. The building value is $3,400,000 and the building cap rate is 11%. The land cap rate is 7%. What is the value of the land by the Land Residual method?
- 875235
- 1228571
- 1337111
- 1450555
1228571
A quarter-quarter section contains _________ acres.
- 40
- 80
- 160
- 240
40
A retail store was just built and sold for $1,800,000. You estimate the value of the site to be $450,000 and the cost of the site improvements at $120,000. The building has 18,400 SF of gross building area. What is the unit cost of the structure per square foot?
- 58.35
- 62.88
- 66.85
- 71.15
66.85
A roof has an actual age of 8 years and an effective age of 10 years. It has an expected economic life of 20 years and an expected useful life of 25 years. The cost to replace the roof at the end of its life is $40,000. How much is the short-lived deterioration of the roof.
- 7200
- 12800
- $14, 000
- 10800
12800
A three-story office building has no elevator. To install one would cost $70,000. If it had been installed when the building was being built, it would have cost $50,000. Market evidence shows that if there were an elevator, the rents could be increased by $10,000 per year. The market GIM is 6.5. How much is the depreciation?
- 20000
- 30000
- 50000
- 70000
20000
The value loss is $10,000 X 6.5. = $65,000 - less than the cost to cure of $70,000
Functional Incurable Caused by a Deficiency
Cost of existing item $ 0
Less depreciation previously charged - 0
Plus value of loss 70,000
Less cost if installed new - 50,000
Equals depreciation for functional obsolescence $ 20,000
A waterfront lot sold for $160,000. It had 55 feet of frontage and a depth of 155 feet. What did it sell for per front foot?
- 2242
- 2622
- 2909
- 3278
2909
About what percent of U.S. households are occupied by one or two people?
- 0.4
- 0.5
- 0.6
- 0.7
0.6
An apartment building along the interstate in the next block recently sold for $1,300,000 and a similar apartment building away from the interstate sold for $1,200,000. The typical building to land ratio in this market is 70/30. How much depreciation is attributable to the land?
- 10000
- 20000
- 30000
- 50000
30000
An apartment building in Phoenix lacks air conditioning. If it had been installed when the building was built, it would have cost $20,000 but the cost of retrofitting now is $24,000. Installing A/C would allow the owner to increase his Gross Monthly Rents by $300 per month. The current Gross Income Multiplier (GIM) is 7.0. How much is the depreciation illustrated here?
4000
$300 per month X 12 months X 7.0 = $25,200 gain in value. The cost is $24,000, so it is curable.
The depreciation is $24,000 - $20,000 - or $4,000.
An apartment building in Phoenix has individual window air conditioning units built into the walls of each apartment, but they are inadequate. The reproduction cost of the existing units is $24,000 and they are 25% depreciated. It will cost $8,000 to remove them, but they would bring a salvage value of $3,000. It will cost $25,000 to install an appropriate central air conditioning system: $22,000 for the equipment, and $3,000 for retrofit costs. It would have cost $20,000 if it had been installed when the building was built. Comparable rentals indicate the gross rents for the buildings would increase by $5,000 and the GIM is 5.5. How much would the depreciation be?
- 6000
- 24000
- 28000
- 30000
28000
An apartment building would cost $3,750,000 to build new. It is eight years old and has sustained a total of 15% depreciation. It is on a lot worth $1,200,000. What is its value by the Cost Approach?
- 3780000
- 3945000
- 4157500
- 4387500
4387500
An industrial building would cost $5,200,000 to build new. It is 15 years old and has sustained a total of 40% depreciation. It is on a lot worth $1,250,000. What is its value by the Cost Approach?
- 4135900
- 4370000
- 4478000
- 5155000
4370000
An office building was just built and sold for $2,700,000. You estimate the value of the site to be $700,000 and the cost of the site improvements at $220,000. The building has 22,400 SF of gross building area. What is the unit cost of the structure per square foot?
- 68.31
- 72.84
- 76.85
- 79.46
79.46
An old commercial building recently sold for $250,000. The reproduction cost of the improvements today would be $300,000 and the total depreciation is estimated to be 75%. By extraction, what is the land value?
- 125000
- 150000
- 175000
- 200000
175000
An old commercial building recently sold for $300,000. The reproduction cost of the improvements today would be $400,000 and the total depreciation is estimated to be 80%. By extraction, what is the land value?
- 175000
- 240000
- 220000
- 200000
220000
An old commercial building recently sold for $375,000. The reproduction cost of the improvements today would be $400,000 and the total depreciation is estimated to be 80%. By extraction, what is the land value?
- 100000
- 225000
- 295000
- 310000
295000
Develop a Cost Approach using the following information and an Age-life depreciation method. The cost new of the improvements is $2,565,000, the land value is $750,000, the actual age is 28, and the effective age is 20. The total economic life expectancy judged by comparable sales is 50 years. The estimated value by the Cost Approach is:
- 2930800
- 2289000
- 3670400
- 3125900
2289000
Develop a Cost Approach using the following information and an Age-life depreciation method. The cost new of the improvements is $3,420,000, the land value is $1,100,000, the actual age is 28, and the effective age is 25. The total economic life expectancy judged by comparable sales is 50 years. The estimated value by the Cost Approach is ____________.
- 2730800
- 2810000
- 3670400
- 4125900
2810000
Develop a Cost Approach using the following information and an Age-life depreciation method. The cost new of the improvements is $5,680,000, the land value is $1,750,000, the actual age is 22, and the effective age is 18. The total economic life expectancy judged by comparable sales is 50 years. The estimated value by the Cost Approach is:
- 4930800
- 5385200
- 5670400
- 6125900
5385200
Develop a Cost Approach using the following information and an Age-life depreciation method. The cost new of the improvements is $5,680,000, the land value is $1,750,000, the actual age is 22, and the effective age is 18. The total economic life expectancy judged by comparable sales is 50 years. The estimated value by the Cost Approach is:
- 4930800
- 6125900
- 5670400
- 5385200
5385200
Develop a Cost Approach using the following information and an Age-life depreciation method. The cost new of the improvements is $5,820,000, the land value is $1,600,000, the actual age is 14, and the effective age is 10. The remaining economic life judged by comparable sales is 40 years. The estimated value by the Cost Approach is:
- 5930800
- 6256000
- 6670400
- 6925900
6256000
Each section contains _____ acres.
- 40
- 160
- 320
- 640
640
How many feet are in a chain?
- 16.5
- 66
- 100
- 660
66
How many feet are in a mile?
- 640
- 1280
- 5280
- 43560
5280
How many feet are in a mile?
- 640
- 3250
- 5280
- 43560
5280
How many links are in a chain?
- 16.5
- 66
- 100
- 660
100
In the Rectangular Survey system, each township is divided into ____ sections.
- 16
- 32
- 36
- 40
36
Market-extracted depreciation for a property totaled $300,000. A breakdown method of depreciation indicated a total of $38,500 in physical curable deterioration, $70,500 in incurable physical deterioration, and a total of $83,000 in functional obsolescence. What is your estimate of the external obsolescence for this building?
- None
- 82500
- 108000
- 121000
108000
Marshall & Swift classifies a high-rise as any building with ___ or more stories.
- 3
- 4
- 5
- 10
3
Neighborhood A had 38 land sales in 9 months and Neighborhood B had 56 land sales in 2 years. The absorption rate for Neighborhood A was ___ and the absorption rate for Neighborhood B was ___.
- 28, 2.3
- 4.2, 3.2
- 4.2, 2.3
- 2.4, 3.4
4.2, 2.3
Neighborhood A had 38 land sales in 9 months and Neighborhood B had 56 land sales in 2 years. The absorption rate for Neighborhood A was _________ and the absorption rate for Neighborhood B was ______.
- 28, 2.3
- 4.2, 4.6
- 2.4, 2.6
- 4.2, 2.3
4.2, 2.3
One acre contains ________ square feet.
- 43560
- 43650
- 32500
- 6400
43560
One acre contains ______________ square feet.
- 1600
- 6400
- 43560
- 45360
43560
Seven lots sold at the following prices per acre: $7,500, $8,250, $7,136, $8,444, $8,814, $6,933 and $8,665. What was the mean sales price per acre?
- 6923
- 7193
- 7622
- 7963
7963
Six lots sold at the following prices per square foot: $3.24, $3.36, $3.72, $3.38, $4.01, and $3.18. What was the mean sales price per square foot?
- 3.31
- 3.48
- 3.64
- 3.78
3.48
Six lots sold at the following prices per square foot: $4.23, $4.35, $4.73, $4.88, $5.01, and $5.26. What was the mean sales price per square foot?
- 4.69
- 4.72
- 4.74
- 4.78
4.74
The average family in the United States is now below ____.
- 4
- 3.5
- 3
- 2.5
3
The base cost for a 12,000 square foot Good quality building is $87.35 and the base cost for an Excellent quality building that same size is $122.75. What would be the base cost for a Very Good Quality 12,000 square foot building?
- 97.4
- 98.1
- 99.2
- 105.05
105.05
The base cost for a 12,000 square foot Good quality building is $92.48 and the base cost for an Excellent quality building that same size is $128.44. What would be the base cost for a Very Good Quality 16,000 square foot building?
- 102.9
- 106.1
- 110.46
- 115.05
110.46
The base cost of an office building is $72.64 per SF. It is eight stories high. What would be the adjusted cost per square foot?
- 74.46
- 67.03
- 78.4
- 91.24
74.46
The base cost of an office building is $82.88 per SF. It is seven stories high. What would be the adjusted cost per square foot?
- 95.14
- 97.03
- 84.54
- 101.24
84.54
The building you are appraising has a total calculated cost from the MVS of $59.55 per square foot. The local multiplier is 1.10 and the current cost multiplier is .98. What is the indicated total cost per square foot?
- 64.19
- 65.66
- 66.12
- 68.18
64.19
The building you are appraising has a total calculated cost from the MVS of $62.04 per square foot. The local multiplier is 1.14 and the current cost multiplier is .94. What is the indicated total cost per square foot?
- 64.55
- 66.48
- 68.12
- 69.33
66.48
The contract cost for constructing a building in June 2001 was $675,400. The index for June 2001 was 164.6 and the current index is 255.2. What would be the current cost to construct the building using the Cost Indexing Method?
- 1046870
- 1133490
- 1275321
- 1458305
1046870
The contract cost for constructing a building in June 2002 was $824,900. The index for June 2002 was 132.5 and the current index is 190.8. What would be the current cost to construct the building using the cost indexing method?
- 1046870
- 1133490
- 1187856
- 1458305
1187856
The cost new of the subject property is $1,695,000, the land value is $350,000, and the effective age is 12. The total economic life is estimated to be 40 years. The subject has deferred maintenance items that total $125,000. After these repairs, the effective age will be reduced to 10 years. What is the value of the property by a Cost Approach using the Modified Age-life method of depreciation?
- 1449000
- 1527500
- 1585500
- 1638400
1527500
The cost new of the subject property is $2,270,000, the land value is $950,000, the actual age is 17, and the effective age is 14. The total economic life is estimated to be 40 years. The subject has deferred maintenance items that total $260,000. After these repairs, the effective age will be reduced to 12 years. What is the value of the property by a Cost Approach using the Modified Age-life method of depreciation?
- 2077000
- 2146500
- 2357000
- 2638400
2357000
The cost new of the subject property is $2,695,000, the land value is $750,000 and the effective age is 12. The total economic life is estimated to be 40 years. The subject has deferred maintenance items that total $125,000. After these repairs, the effective age will be reduced to 10 years. What is the value of the property by a Cost Approach using the Modified Age-life method of depreciation?
- 2449000
- 2938400
- 2885500
- 2677500
2677500
The cost new of the subject property is $2,695,000, the land value is $750,000, and the effective age is 12. The total economic life is estimated to be 40 years. The subject has deferred maintenance items that total $125,000. After these repairs, the effective age will be reduced to 10 years. What is value of the property by a Cost Approach using the Modified Age-life method of depreciation?
- 2449000
- 2677500
- 2885500
- 2938400
2677500
The current cost multiplier is .95 and the local cost multiplier is 1.08. What is the combined multiplier?
- 1.02
- 1.03
- 1.05
- 1.06
1.03
The current cost multiplier is 1.06 and the local cost multiplier is .89. The refined square foot cost of the building is $69.35 per square foot and it contains 6,555 square feet. What is the final cost of the building? (HINT: Please round the multiplier and the multiplier- adjusted cost per SF to two decimal places.)
- 403092.86
- 409563.33
- 416590.56
- 428859.5
428859.5
The current cost multiplier is 1.10 and the local cost multiplier is .98. The refined square foot cost of the building is $72.13 per square foot and it contains 8,345 square feet. What is the final cost of the building? (HINT: Please round the multiplier and the multiplier-adjusted cost per SF to two decimal places.)
- 632092.86
- $648, 874.99
- 666590.56
- 687313.9
$648, 874.99
The current cost multiplier is 1.13 and the local cost multiplier is 1.02. What is the combined multiplier?
- 1.14
- 1.15
- 1.16
- 1.18
1.15
The Floor Area/Perimeter multiplier for a 2,000 square foot building with a perimeter of 300 feet is 1.204 and the Floor Area/Perimeter multiplier for a 2,000 square foot building with a perimeter of 350 feet is 1.286. What would be the multiplier for a 2,000 square foot building with a perimeter of 320 feet?
- 1.203
- 1.2147
- 1.2245
- 1.2368
1.2368
The indicated cost figure in a cost manual is $68.22 per square foot for a particular building and the current cost multiplier is .96. What is the current cost per square foot?
- 62.14
- 64.95
- 65.33
- 65.49
65.49
The indicated cost figure in a cost manual is $81.88 per square foot for a particular building and the current cost multiplier is 1.12. What is the current cost per square foot?
- 88.14
- 91.71
- 95.32
- 98.49
91.71
The refined square foot cost of a building is $83.45 per square foot. The current cost multiplier is 1.13. What is the adjusted cost?
- 94.3
- 95.5
- 96.12
- 98.78
94.3
The refined square foot cost of a building is $92.34 per square foot. The current cost multiplier is 1.16. What is the adjusted cost?
- 104.3
- 105.5
- 106.12
- 107.11
107.11
The replacement cost new of the subject property improvements is $2,270,000, the land value is $950,000, the actual age is 17, and the effective age is 14. The total economic life is estimated to be 40 years. The subject has deferred maintenance items that total $260,000 which, if fixed would result in an effective age of 12 years. What is the indicated value of the property by the Cost Approach using the Modified Age-life method of depreciation?
- 2077000
- 2146500
- 2357000
- 2638400
2357000
The Story Height table for a casino you are appraising has a wall height multiplier of 1.355 for 30 feet and 1.467 for 34 feet. Your subject has a wall height of 33 feet. What would be the interpolated multiplier?
- 1.366
- 1.372
- 1.439
- 1.385
1.439
The suburbs began in America in the:
- 1930s
- 1940s
- 1950s
- 1960s
1940s
There are ____________ generally recognized methods of valuing a site.
- 3
- 4
- 5
- 6
6
What would be the Story Height multiplier for a 12 ft ceiling?
- 1.015
- 1.025
- 1.03
- 1.055
1.055
What would be the Story Height multiplier for a 14 ft ceiling?
- 1.015
- 1.025
- 1.035
- 1.114
1.114
You have good comparable sales that indicate the total value of your subject property, as improved, is $260,000. Research shows that typically properties of this type demonstrate that 35% of the total value is in the land and the rest in the improvements. By the Allocation method, what is your opinion of the value of the subject site?
- 75000
- 91000
- 95000
- 101000
91000
A parcel is valued at $290,000. Zoning allows it to be subdivided into 5 lots and it is estimated that each lot could sell for $65,000. Site development (sewer, grading, road, etc.) would cost $50,000. What is the highest and best use?
- Leave it alone
- Subdivide it into only 4 lots
- Subdivide it into 5 lots
- Unable to determine from the data provided
Leave it alone
A parcel is valued at $240,000. Zoning allows it to be subdivided into 5 lots and it is estimated that each lot could sell for $65,000. Site development (sewer, grading, road, etc.) would cost $50,000. What is the highest and best use?
- Leave it alone
- Subdivide it into only 4 lots
- Subdivide it into 5 lots
- Unable to determine from the data provided
Subdivide it into 5 lots
An apartment building in Houston lacks air conditioning. If it had been installed when the building was built, it would have cost $30,000, but the cost of retrofitting now is $35,000. Installing A/C would allow the owner to increase his Gross Monthly Rents by $450 per month. The current Gross Income Multiplier (GIM) is 7.0. What type of obsolescence is this?
- Functional incurable
- Physical curable
- Functional curable
- Physical incurable
Functional curable
Increase in value - 450 x 12 x 7 = $37,800, Cost is $35,000 =>
curable
An apartment building in Miami lacks air conditioning. If it had been installed when the building was built, it would have cost $20,000, but the cost of retrofitting now is $24,000. Installing A/C would allow the owner to increase his Gross Monthly Rents by $300 per month. The current Gross Income Multiplier (GIM) is 7.0. What type of obsolescence is this?
- Functional incurable
- Physical curable
- Functional curable
- Physical incurable
Functional curable
Increase in value - 300127 = $25,200
Cost - $24,000 => curable
aAn apartment building in Phoenix has individual window air conditioning units built into the walls of each apartment, but they are inadequate. The reproduction cost of the existing units is $24,000 and they are 25% depreciated. It will cost $8,000 to remove them, but they would bring a salvage value of $3,000. It will cost $25,000 to install an appropriate central air conditioning system: $22,000 for the equipment, and $3,000 for retrofit costs. It would have cost $20,000 if it had been installed when the building was built. Comparable rentals indicate the gross rents for the buildings would increase by $5,000 and the GIM is 6.5. What type of depreciation is this?
- Functional curable
- Physical curable
- Functional incurable
- Physical incurable
Functional curable
Increase in value - 5000*6.5 = 32,500
Cost = 8000-3000+25000 = 30,000 => curable
Note: to calculate amount of depreciation
Cost of existing item $24,000
Less depreciation previously charged - $6,000
Plus cost to cure (all costs) $30,000
Less cost if installed new - 20,000
Equals depreciation for functional obsolescence $28,000
An apartment building in Phoenix has individual window air conditioning units built into the walls of each apartment, but they are inadequate. The reproduction cost of the existing units is $25,000 and they are 30% depreciated. It will cost $10,000 to remove them, but they would bring a salvage value of $4,000. It will cost $30,000 to install an appropriate central air conditioning system: $25,000 for the equipment, and $5,000 for retrofit costs. It would have cost $25,000 if it had been installed when the building was built. Comparable rentals indicate the gross rents for the buildings would increase by $6,000 and the GIM is 6.5. What type of depreciation is this?
- Functional curable
- Physical curable
- Functional incurable
- Physical incurable
Functional curable
Increase in value - 6000*6.5=39000
Cost to cure=36000 => curable
Note: To calculate depreciation:
Functional Curable requiring a Substitution Procedure
Cost of existing item $ 25,000
Less depreciation previously charged - 7,500
Plus cost to cure (all costs) 36,000
Less cost if installed new - 25,000
Equals depreciation for functional obsolescence $28,500
