Replacement cost for the house you want to purchase has been estimated as $300,000 with the...
Replacement cost for the house you want to purchase has been estimated as $300,000
with the subject property (built in 2005) having a 75-year economic life. The land value is estimated to be $125,000. Calculate the Estimated Market Value of the property using the Cost approach, assuming no external or functional obsolescence.
Homework Answers
The formula to calculate the estimated market value of property is
=Land value + (Cost new - Accumulated depreciation)
=125000+(300000-0)
=425000
(depreciation is taken 0, because clearly given in the question "assuming no obsolescence ")
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