RAA RAA Cost Approach & Depreciation

Question 1

In the cost approach, what does 'reproduction cost' mean?

Accepted Answer

Cost to build an exact replica using the same materials and methods as the original

Answer

Cost to build a functionally equivalent structure using modern materials

Answer

Cost to purchase a comparable property on the open market

Answer

Cost to demolish and clear the existing structure

Question 2

Which cost approach method estimates improvement value by applying a cost per square foot to the gross living area?

Accepted Answer

Comparative Unit Method (Square Foot Method)

Answer

Quantity Survey Method

Answer

Unit-in-Place Method

Answer

Index Method

Question 3

Physical deterioration in the cost approach is best described as:

Accepted Answer

Loss in value caused by wear, tear, and aging of the physical structure

Answer

Loss in value due to changes in the neighborhood

Answer

Loss in value due to outdated design or floor plan

Answer

Loss in value caused by zoning changes

Question 4

Functional obsolescence resulting from a deficiency (something the subject lacks compared to current market standards) is called:

Accepted Answer

Incurable functional obsolescence — deficiency

Answer

Curable physical deterioration

Answer

External obsolescence

Answer

Superadequacy

Question 5

What is 'superadequacy' in the context of the cost approach?

Accepted Answer

An excess feature whose cost exceeds its contribution to market value

Answer

An improvement that adds more value than it costs

Answer

A property that exceeds local zoning requirements

Answer

A building with above-average physical condition

Question 6

External (economic) obsolescence in the cost approach is always considered:

Accepted Answer

Incurable, because it originates from forces outside the property

Answer

Curable by the property owner

Answer

A form of physical deterioration

Answer

Only relevant to commercial properties