AAFM CWM_LEVEL_2 Exam - Topic 2 Question 84 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 84
Topic #: 2

Section B (2 Mark)

Reproduction cost has been estimated as Rs 350,000 for a property with a 70-year economic life. The current effective age of the property is 15 years. The value of the land is estimated to be Rs 55,000. What is the estimated market value of the property using the cost approach, assuming no external or functional obsolescence?

ARs 3,30,000

BRs 3,45,500

CRs 2,50,000

DRs 2,75,000

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Suggested Answer: B

by Mozell at Aug 06, 2024, 06:30 AM

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Daren

9 months ago

Totally agree, Rs 3,30,000 sounds right to me!

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Gilma

10 months ago

Really? That seems a bit high for a 15-year-old property.

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Xochitl

10 months ago

I think the market value should be around Rs 3,30,000.

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Ruthann

10 months ago

Land value is Rs 55,000, don't forget that!

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Sherly

10 months ago

The reproduction cost is Rs 350,000.

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Nikita

11 months ago

I believe the total depreciation would be around Rs 75,000, but I'm not confident about the final market value calculation.

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Daron

11 months ago

If the economic life is 70 years and the property is 15 years old, does that mean we have 55 years left? I hope I remember the formula correctly.

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Reiko

11 months ago

I remember a similar question where we had to subtract depreciation from the reproduction cost. I think we might need to find the annual depreciation first.

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Gail

11 months ago

I think we need to calculate the depreciation first, but I'm not entirely sure how to apply the economic life to the reproduction cost.

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Alaine

11 months ago

Ugh, I'm already starting to get confused. What was the formula for depreciation again? And how do I know which numbers to plug in where? I better re-read the question a few times to make sure I understand what I'm supposed to do.

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Carey

11 months ago

I've got this! The key is to use the formula for depreciation, which is the effective age divided by the economic life, and then multiply that by the reproduction cost. Then I just need to subtract the depreciation from the reproduction cost and add the land value. Easy peasy!

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Veronika

11 months ago

Whoa, this is a lot of information to process. I'm not totally sure how to approach this one. Maybe I should review my notes on the cost approach and try to break it down into smaller steps.

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Janine

11 months ago

Okay, let's think this through step-by-step. We have the reproduction cost, the current effective age, and the land value. I think we need to calculate the depreciation and then subtract that from the reproduction cost to get the estimated market value.

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Bronwyn

11 months ago

Hmm, this seems straightforward enough. I just need to remember the formula for calculating depreciation based on the effective age and economic life. As long as I don't mess up the math, I should be able to get the right answer.

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Theresia

11 months ago

Ah, I see now. The "Catalog content" option is probably for grouping multiple catalog items together in a single request, rather than just referencing a single item. That makes sense to me.

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Mari

1 year ago

Wait, where's the formula for this? I knew I should have brought my real estate cheat sheet.

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Corazon

1 year ago

I bet the answer is a prime number. Because why not? *chuckles*

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Lorrine

1 year ago

D) Rs 2,75,000

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Georgene

1 year ago

C) Rs 2,50,000

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Joseph

1 year ago

B) Rs 3,45,500

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Felicitas

1 year ago

A) Rs 3,30,000

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Samira

1 year ago

Ah, the cost approach. Time to put on my calculator hat and crunch some numbers!

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Doug

1 year ago

D) Rs 2,75,000

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Tawanna

1 year ago

C) Rs 2,50,000

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Han

1 year ago

B) Rs 3,45,500

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Simona

1 year ago

A) Rs 3,30,000

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Walton

1 year ago

Hold up, is this a trick question? I better double-check my work.

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Nathan

1 year ago

Let's go with A) Rs 3,30,000 then. It seems to be the most reasonable option.

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Chun

1 year ago

I agree, the reproduction cost and current age are key factors in determining the market value.

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Lovetta

1 year ago

I think it's A) Rs 3,30,000.

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Lorriane

1 year ago

D) Rs 2,75,000

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Lenora

1 year ago

C) Rs 2,50,000

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Magnolia

1 year ago

B) Rs 3,45,500

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Dante

1 year ago

A) Rs 3,30,000

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Christa

1 year ago

Okay, let's think this through step-by-step. I feel like I'm missing something, but I'll give it my best shot.

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Vallie

1 year ago

Hmm, this seems like a straightforward cost approach calculation. Let me see if I can work this out.

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Leslee

1 year ago

That's incorrect. Remember to account for the reproduction cost and land value in the cost approach.

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Kristel

1 year ago

C) Rs 2,50,000

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Marvel

1 year ago

That's incorrect. Make sure to consider the effective age of the property in your calculation.

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Mertie

1 year ago

B) Rs 3,45,500

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Erasmo

1 year ago

That's correct. The reproduction cost minus depreciation plus land value gives the estimated market value.

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Edmond

1 year ago

A) Rs 3,30,000

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Selma

1 year ago

I agree with Veronique, the answer should be B) Rs 3,45,500 considering the reproduction cost and the current effective age of the property.

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Veronique

1 year ago

I disagree, I believe the answer is B) Rs 3,45,500 because the reproduction cost is Rs 350,000.

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Natalya

1 year ago

I think the answer is A) Rs 3,30,000.

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