SAEE SAEE - Cost Approach and Depreciation Questions and Answers 3

Question 1

A 15-year-old commercial building has an effective age of 10 years and a total economic life of 50 years. What is the accrued depreciation percentage?

Accepted Answer

20%

Answer

Accrued depreciation = effective age / total economic life = 10 / 50 = 20%.

Question 2

Which type of depreciation is caused by negative forces outside the property boundaries, such as a nearby industrial plant?

Accepted Answer

External obsolescence

Answer

External obsolescence (also called economic obsolescence) results from adverse conditions outside the property itself.

Question 3

The cost to construct a building using current construction standards and materials, rather than exactly replicating the original, is called:

Accepted Answer

Replacement cost

Answer

Replacement cost uses current materials and design standards to achieve the same utility, while reproduction cost duplicates the original exactly.

Question 4

An appraiser identifies a building with deferred maintenance costing $8,000 to cure. This is best classified as:

Accepted Answer

Curable physical deterioration

Answer

Deferred maintenance is curable physical deterioration because it is economically feasible to repair.

Question 5

In the cost approach, the land value must be estimated separately because:

Accepted Answer

Land does not depreciate

Answer

Land is considered to have an infinite economic life and does not depreciate, so it is valued separately from improvements.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Cost Approach and Depreciation Questions and Answers 3