- CFA Exams
- CFA Level I Exam
- Study Session 15. Alternative Investments
- Reading 39. Private Real Estate Investments
- Subject 4. The income valuation approach
CFA Practice Question
A house has a value of $200,000 as a house. It has a site value of $250,000 as a commercial lot, but the cost to demolish the house and prepare the site is $25,000. What is the house' market value?
B. $225,000.
C. $250,000.
A. $200,000.
B. $225,000.
C. $250,000.
Correct Answer: B
The highest and best use of the site is to demolish the house and sell the site as a commercial lot. $250,000 - 25,000 = $225,000.
User Contributed Comments 1
| User | Comment |
|---|---|
| rlabog | Highest and best use |