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REE 4103 Unit 7 Quiz (1)
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REE 4103 Unit 7 Quiz (1)
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REE 4103 Unit 7 QuizA building that is too large for the neighborhood is an example of functional
obsolescence in the form of overimprovement. Another example of functional
obsolescence is:
a sound building with a worn-out heating system
an awkwardly shaped floor plan in an office building
a residence abutting a new freeway
an older building with modernized elevators - ANS-an awkwardly shaped floor plan in an
office building
In the cost approach, the valuation of land involves the principle of:
conformity
Contribution
Highest and Best use
variable proportions - ANS-Highest and Best use
Physical deterioration refers to
Losses in value from wear and tear
Losses in value from all causes
Losses in value from changes in market tastes
Losses in value from proximity to an adverse condition - ANS-Losses in value from wear
and tear
Book depreciation refers to
Functional losses in market value from all causes
Losses in market value due to scheduled depreciation
Losses in value due to excessive obsolescence
Losses in value from an accounting perspective on the balance sheet of a business tax
return - ANS-Losses in value from an accounting perspective on the balance sheet of a
business tax return
Direct costs are
Expenditures for items that are necessary but are not usually included in the
construction contract
Expenditures for the labor and material used in the construction of the improvements
An incentive that is market derived and provides compensation for the developer
The costs associated with a change in title - ANS-Expenditures for the labor and
material used in the construction of the improvements
, The cost approach is not useful for
checking value approaches
estimating the value of new property
appraising older homes in an active market
appraising institutional or special-use properties - ANS-checking value approaches
Reproduction cost is:
original cost adjusted for inflation
the cost new of an exact replica of the subject
the cost of acquiring an equally desirable substitute
the current cost of constructing a functionally equivalent structure - ANS-the cost new of
an exact replica of the subject
Depreciation
Accrues on a straight-line basis (i.e., each year's depreciation is the same as the
previous year)Accrues to the land and building according to the land-to-building ratios
listed in the appraisal report
Is the difference between the cost of the improvements and the value as of the effective
date of appraisal
Is always due to wear and tear on the improvements - ANS-Is the difference between
the cost of the improvements and the value as of the effective date of appraisal
The cost approach is based on the assumption that:
the cost to produce a building plus the cost of the site are an indicator of its value.
the cost to produce a building is often more than its value.
there is little relationship between cost and value.
none of the above. - ANS-the cost to produce a building plus the cost of the site are an
indicator of its value.
Entrepreneurial incentive is
The amount of money entrepreneurs receive as a reward for their efforts
The amount of money reserved for unforeseen expenses
The amount of money entrepreneurs can borrow
The amount of money entrepreneurs expect to receive as a reward for their efforts -
ANS-The amount of money entrepreneurs expect to receive as a reward for their efforts
Cost is:
always the same as value.
always the same as price.
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