The cost approach to value is based on the principle that a buyer will pay no more for a property than the cost to:

The cost approach to value is based on the

Multiple choice — select the best answer

AAcquire an equivalent substitute site and construct an equally desirable improvement
BPurchase the subject property at its current listing price
CReproduce the exact improvement using original materials and methods
DReplace all components of the improvement with brand-new materials

✓ Correct answer: A. Acquire an equivalent substitute site and construct an equally desirable improvement The cost approach rests on the substitution principle: a rational buyer will pay no more than the cost to acquire a comparable site and build an equally desirable improvement. This sets an upper limit on value.

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