CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

The subject property has a barn which would cost $40,000 to reproduce today. Effective age is 40 years and remaining economic life is 40 years. Curable physical deterioration is $10,000. What is the barn's value based on the cost approach?
A. $15,000
B. $25,000
C. $30,000
Explanation: 40,000 - curable physical deterioration 10,000 = 30,000.
Incurable physical deterioration = 40/80 x 30,000 = 15,000.
Value: 40,000 - 10.000 - 15,000 = 15,000.

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