The cost approach to valuation assumes the market value of a new building is similar to the cost of constructing it today. Which of the following terms refers to the expenditure required to construct a building of equal utility using modern construction techniques, materials, and design that eliminates outdated aspects of the structure?
A) Reproduction cost
B) Replacement cost
C) Fixed cost
D) Variable cost

Question

Quizplus · Accepted Answer

Replacement cost refers to the cost of constructing a new building that serves the same purpose or function as the original but using modern construction methods, materials, and designs. This approach updates the structure to current standards, eliminating any outdated features.

The Cost Approach to Valuation Assumes the Market Value of a New