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Cost estimates are useful only in the cost approach to value



Cost estimates are useful only in the cost approach to value.

T              F              2. The cost estimates used in appraisals should reflect cost levels on the date of value, instead of actual or historic costs.

T              F              3. Replacement cost and reproduction cost are the same.

T              F              4. The cost approach is often emphasized when estimating the value of new or nearly new property.

T              F              5. The quantity survey method is the most practical and widely used method of estimating construction costs.

T              F              6. The unit-in-place method of estimating costs is most often used as a supplement to refine the square-foot method.

T              F              7. Direct cost elements include labor, materials, and design costs.

T              F              8. Indirect cost elements should not be included in cost estimates.

T              F              9. Increased floor area results in higher costs on a per-square-foot basis.

T              F              10. Some cost manual services provide online computer access.












Chapter 12 Quiz

Circle T or F to indicate True or False as the better answer.

T              F              1. Accrued depreciation can be defined in appraisal terms as the total loss in value from all causes.

T              F              2. Economic obsolescence is caused by factors outside the property.

T              F              3. Depreciation is usually classified as incurable if it is not economically feasible to correct the condition(s) causing the loss in value.

T              F              4. A misplaced improvement suffers from functional obsolescence.

T              F              5. Allowable deduction from book value is one of the four basic appraisal methods for measuring accrued depreciation.

T              F              6. The sales data or market method is the most direct way to estimate loss in value.

T              F              7. When you base your depreciation estimate on the “effective age” of the building rather than the actual age, you are attempting to estimate market’s view of the property.

T              F              8. A gross income multiplier is used to estimate loss in value by the cost-to-cure method.

T              F              9. The capitalized income method can be used to estimate either the amount of accrued depreciation from all causes, or that from a single cause.

T              F              10. A 50-year-old building with a total life expectancy of 100 years should be depreciated at 50%, regardless of whether there is deferred maintenance and/or extensive updating.Cost estimates are useful only in the cost approach to value