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Question
Assume you have been hired to appraise a local hospital. Your best estimate of the reproduction (or replacement) cost of the building is $3,700,000. However, upon evaluating the use of land in the local area, you have deemed the value of the site to be worth an additional $800,000. If the building has depreciated by $500,000 over its lifetime and there are no further depreciation losses due to external or functional obsolescence, what is the indicated value of the hospital using the cost approach?A. $2,400,000
B. $3,700,000
C. $4,000,000
D. $4,500,000
Answer
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Related questions
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C. Soft construction costs
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With a site under control, the developer will begin to evaluate the feasibility of the project. The main tool that a developer will use in determining the financial feasibility of a project is:
A. Net present value (NPV) analysis
B. Cost approach to valuation
C. Repeat-sales approach
D. Direct capitalization
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While the risks of construction lending may be less in a number of respects than those associated with land acquisition, banks still require a premium in their lending rate as compensation for the risks involved. For construction loans, banks typically require a premium above LIBOR that ranges from:
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Assume a retail tenant is paying a base rent of $120,000 per year (or $10,000 per month). In addition, the tenant must pay 7 percent of gross store sales in excess of $143,000 per month as percentage rent. If the store produces $170,000 in gross sales in a month, what is the total rent due for the month?A. $10,000B. $10,158C. $11,890D. $21,900
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When the supply of space exceeds the demand, it is common for owners to provide the tenant with a period of free or perhaps reduced rent. This is commonly referred to as a(n):
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Under certain circumstances, investors are permitted to reduce the amount of the taxable income that they report by an amount that is intended to reflect the wear and tear of an asset over time. This is commonly referred to as:
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D. capital losses
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The Federal Housing Administration (FHA) insures loans made by private lenders that meet FHA's property and credit-risk standards. Which of the following statements concerning FHA insurance is true?
A. The insurance is paid by the lender and protects the lender against loss due to borrower default.
B. The insurance is paid by the borrower and protects the lender against loss due to borrower default.
C. The insurance is paid by the lender and protects the borrower against loss due to lender default.
D. The insurance is paid by the borrower and protects the borrower against loss due to lender default.
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Mortgage insurance rates vary with the perceived riskiness of the loan. Which of the following scenarios would result in a higher mortgage insurance premium?
A. Lower loan-to-value ratio
B. Shorter loan term
C. Stronger credit record of the borrower
D. A "cash-out" refinancing loan
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C. Veterans Affairs loan
D. Section 203 loan
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B. Only those claimants who are properly notified and engaged in the foreclosure suit can lose their claims to the property.
C. When a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property. .
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