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

Show Suggested Answer

Suggested Answer: B

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

Limited Time Offer

25%

Off

Get Premium CWM_LEVEL_2 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Daren

3 months ago

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

upvoted 0 times

...

Gilma

4 months ago

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

upvoted 0 times

...

Xochitl

4 months ago

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

upvoted 0 times

...

Ruthann

4 months ago

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

upvoted 0 times

...

Sherly

4 months ago

The reproduction cost is Rs 350,000.

upvoted 0 times

...

Nikita

5 months ago

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

upvoted 0 times

...

Daron

5 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.

upvoted 0 times

...

Reiko

5 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.

upvoted 0 times

...

Gail

5 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.

upvoted 0 times

...

Alaine

5 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.

upvoted 0 times

...

Carey

5 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!

upvoted 0 times

...

Veronika

5 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.

upvoted 0 times

...

Janine

5 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.

upvoted 0 times

...

Bronwyn

5 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.

upvoted 0 times

...

Theresia

5 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.

upvoted 0 times

...

Mari

10 months ago

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

upvoted 0 times

...

Corazon

10 months ago

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

upvoted 0 times

Lorrine

9 months ago

D) Rs 2,75,000

upvoted 0 times

...

Georgene

9 months ago

C) Rs 2,50,000

upvoted 0 times

...

Joseph

9 months ago

B) Rs 3,45,500

upvoted 0 times

...

Felicitas

9 months ago

A) Rs 3,30,000

upvoted 0 times

...

Samira

10 months ago

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

upvoted 0 times

Doug

8 months ago

D) Rs 2,75,000

upvoted 0 times

...

Tawanna

8 months ago

C) Rs 2,50,000

upvoted 0 times

...

Han

9 months ago

B) Rs 3,45,500

upvoted 0 times

...

Simona

9 months ago

A) Rs 3,30,000

upvoted 0 times

...

Walton

10 months ago

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

upvoted 0 times

Nathan

9 months ago

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

upvoted 0 times

...

Chun

9 months ago

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

upvoted 0 times

...

Lovetta

9 months ago

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

upvoted 0 times

...

Lorriane

9 months ago

D) Rs 2,75,000

upvoted 0 times

...

Lenora

9 months ago

C) Rs 2,50,000

upvoted 0 times

...

Magnolia

9 months ago

B) Rs 3,45,500

upvoted 0 times

...

Dante

9 months ago

A) Rs 3,30,000

upvoted 0 times

...

Christa

10 months 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.

upvoted 0 times

...

Vallie

11 months ago

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

upvoted 0 times

Leslee

9 months ago

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

upvoted 0 times

...

Kristel

9 months ago

C) Rs 2,50,000

upvoted 0 times

...

Marvel

9 months ago

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

upvoted 0 times

...

Mertie

9 months ago

B) Rs 3,45,500

upvoted 0 times

...

Erasmo

10 months ago

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

upvoted 0 times

...

Edmond

10 months ago

A) Rs 3,30,000

upvoted 0 times

...

Selma

11 months 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.

upvoted 0 times

...

Veronique

11 months ago

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

upvoted 0 times

...

Natalya

11 months ago

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

upvoted 0 times

...