SU # 42__Cost Approach Flashcards
One of the strengths of the cost approach is that it
takes into account the amount of money required to develop a similar property.
reveals the owner’s return on money invested in the cost of development.
is very accurate for a property with new improvements that represent the highest and best use.
results in an actual price in dollars instead of an estimated value.
is very accurate for a property with new improvements that represent the highest and best use.
One weakness of the cost approach for appraising market value is that
builders may not pay market value for materials or labor.
market value is not always the same as what the property cost to construct.
comparables used may not have similar quality of construction.
new properties have inestimable costs and rates of depreciation.
market value is not always the same as what the property cost to construct.
The cost of constructing a similar structure at current prices and using current materials and methods is called
reproduction cost.
replacement cost.
book value.
depreciated value.
replacement cost.
Which of the following statements best describes the cost approach to appraisal?
Apply a depreciation factor to the reported actual cost of acquiring and improving the subject property.
Estimate the cost of building the improvements on the subject property.
Estimate the land value and add to this the actual cost of the improvements adjusted for competitive differences with similar properties.
Add the estimated land value and cost of improvements and subtract the accrued depreciation of the improvements.
Add the estimated land value and cost of improvements and subtract the accrued depreciation of the improvements.
The loss of value due to adverse changes in the surroundings of the subject property is considered to be
an incurable loss.
a curable loss.
a functional design feature that is sometimes curable.
a value contribution factor that cannot be accounted for in an appraisal.
an incurable loss.
An appraisal that seeks the cost of constructing, at current prices, a “precise duplicate” of the subject improvements is seeking the
replacement cost.
unit cost.
reproduction cost.
cost index.
reproduction cost.
Which of the following methods of estimating cost adds together estimates of individual cost components such as material and labor?
Unit Comparison Method.
Unit-in Place Method.
Quantity Survey Method.
Index Method.
Unit-in Place Method.
The cost approach is used for ___________ properties, which cannot be valued by other methods because of lack of comparable sales or income data.
multi-use
special-purpose
rental
old
special-purpose
The principle underlying straight-line depreciation from physical deterioration is that
eventually, a property loses all of its value.
a property loses a portion of its value each year because of economic obsolescence.
a property loses the same increment of value each year over the economic life of the property.
the value lost to depreciation is incurable.
a property loses the same increment of value each year over the economic life of the property.
A property is being appraised by the cost approach. The appraiser estimates that the land is worth $10,000 and the replacement cost of the improvements is $75,000. Total depreciation from all causes is $7,000. What is the indicated value of the property?
$68,000.00
$92,000.00
$82,000.00
$78,000.00
$78,000.00
