Basic Appraisal Procedures Chapter 12 - Comprehensive Review Quiz Questions with complete solution

Basic Appraisal Procedures Chapter 12 - Comprehensive Review Quiz Questions with complete solution Basic Appraisal Procedures Chapter 12 - Comprehensive Review Quiz A property has a cost new of $350,000. It has an effective age of 20 years and a total expected economic life of 65 years. There are curable items totaling $45,000. If they are cured, it will reduce the effective age to 15 years. What is the value of the improvements on a modified age-life basis, before including the site value? - correct answer $234,545 $350,000 - $45,000 = $305,000. 15 ÷ 65 = .231 or 23.1%. $305,000 X .231 = $70,455. $305,000 - $70,455 = $234,545. The subject is a 15 year old duplex that would cost $240,000 to build new today. It is in good condition and you estimate the effective age to be 10 years. Your estimate of total economic life is 50 years. Its land value is $60,000. What is its value by the cost approach? - correct answer $252,000 Cost Approach Using Age- Life Method. 10 ÷ 50 = .20 or 20% depreciation. $240,000 X .20 = $48,000 depreciation. $240,000 - $48,000 = $192,000. $192,000 + $60,000 - $252,000 A house cost $395,000 to build new. It is 5 years old and has sustained a total of 10% depreciation. It sits on a lot worth $65,000. What is its indicated value by the cost approach? - correct answer $420,500