REE 4103 TEST 1 QUESTIONS
WITH REVISED AND UPDATED
ANSWERS
Based on the following cost estimates, what is the reproduction cost of a 2,350-sq.-ft.
house with a 1,100-sq.-ft. basement, a 650-sq.-ft. attached garage, and a 300-sq.-ft.
wood deck?· Above-grade residence cost = $77 per square foot; · Basement area cost
= $18 per square foot; · Garage cost = $18 per square foot; · Wood deck = $11 per
square foot
$215,750
$212,450
$200,750
$180,950 - Answer-$215,750
Which method of estimating cost considers each building component, as installed,
including the material and labor?
Comparative-unit, also known as price per square foot
Unit-in-place
Quality survey
Contractor trending - Answer-Unit-in-place
Reproduction or replacement cost includes all of the following except
direct or hard costs
indirect or soft costs
fixed and variable expenses of operations
elevator shafts - Answer-fixed and variable expenses of operations
1. A 30-year-old buidling with an effective age of 20 years has a total life expectancy of
50 years. How much depreciation has occurred?
10%
20%
40%
60% - Answer-40%
A property sold for $125,000 in a cash sale. It was 12 years old and had a site value of
$30,000. The reproduction cost of the building improvements was $102,350. What is the
amount of depreciation overall?
6.50%
7.18%
7.56%
8.85% - Answer-7.18%
Effective age refers to:
chronological age
average age
apparent age, considering the physical condition and marketability of a structure
,the age depreciation method - Answer-apparent age, considering the physical condition
and marketability of a structure
Functional obsolescence is
The difference between what you have and what you should have
The loss in value due to an oversupply in the market
The loss in value due to a property's proximity to an adverse condition
The loss in value from the passage of time - Answer-The difference between what you
have and what you should have
The three principal methods of estimating depreciation are
Age-life, breakdown, and direct capitalization
Age-life, economic extraction, and direct cost allocation
Market extraction, economic age-life, and physical breakdown
Market extraction, age-life, and breakdown - Answer-Market extraction, age-life, and
breakdown
Short-lived items refer to - Answer-• Items requiring periodic replacement (carpet)
• Economic life normally same as physical life
Subtracting an improvement's current market value from its reproduction cost new
indicates: - Answer-• Accrued depreciation
The effective age of a building will probably exceed its actual age when: - Answer-• An
inadequate maintenance program has been used
The land on which a 10-year-old house is located is valued at $128,000, and the
reproduction cost of the dwelling is $92,000. Straight-line depreciation is 2 percent per
year, applied to the building only. If there is not other obsolescence, what is the
indicated value of the property? - Answer-• $202,200
The land on which a 10-year-old house is located is valued at $28,000, and the
reproduction cost of the dwelling is $92,000. Straight-line depreciation is 2 percent per
year, applied to the building only. If there is not other obsolescence, what is the
indicated value of the property? - Answer-• $101,600
The period of time over which improvements contribute to property value is called -
Answer-• Economic life
The period over which a building may be profitably used is its - Answer-• Useful life
he three principal methods of estimating depreciation are - Answer-• Market extraction,
age-life, and breakdown
Useful life is - Answer-• The period of time over which a structure may reasonably be
expected to perform the function for which it was designed.
, • Stains on the ceiling due to water penetration - Answer-• A narrow, short carport that
can be enlarged at a low cost
Which of the following is NOT a type of depreciation?
• Entrepreneurial loss
• External obsolescence
• Physical deterioration
• Functional obsolescence
• Economic obsolescence - Answer-• Entrepreneurial loss
The cost approach is based on the assumption that: - Answer-• The cost to produce a
building plus the cost of the site are an indicator of its value.
Cost is:
. - Answer-• The actual amount of expenditure necessary to acquire or produce
something.
• Reproduction cost is the cost of creating an exact replica of the improvements, using
the same materials, design, layout, and level of craftsmanship.
• Replacement cost is the cost of building an improvement of equal utility, but using
modern materials, techniques, layout, and design
Entrepreneurial profit is the profit made by the: - Answer-• A market-derived figure that
represents the amount an entrepreneur receives for his or her contribution to a project
and risk
Economic life is: - Answer-• The period of time over which improvements contribute to
property value is called
A property being appraised has a house with 5 large bedrooms, one small bathroom
and room for a second bathroom. A properly designed house would have at least two
bathrooms. To take into account the number of bathrooms, the appraiser should deduct
for which of the following. - Answer-***
Which of the following methods is not a usual method for estimating replacement cost of
the improvements of an apartment complex? - Answer-***
Depreciation is defined as the difference between the: - Answer-• Difference between
the contributory value of an improvement and its cost at the time of appraisal
1. Residential sites are often valued using
A price per square foot
A price per animal unit month
A price per room
A price per cubic meter - Answer-A price per square foot
Land is always valued considering
