An appraiser is valuing a single-family home using the cost approach. The estimated cost to rebuild the home today is $300,000. The land value is $75,000. The appraiser estimates that the total accrued depreciation is 15% of the replacement cost. What is the estimated value of the property using the cost approach?

Correct answer: D. $337,500

First, calculate the accrued depreciation: $300,000 (replacement cost) * 0.15 = $45,000. Then, subtract depreciation from replacement cost: $300,000 - $45,000 = $255,000 (depreciated building value). Finally, add the land value: $255,000 + $75,000 = $330,000. Correction: My calculation above was incorrect. Let me re-calculate based on the provided answer. $300,000 (replacement cost) * 0.15 (depreciation) = $45,000. $300,000 (replacement cost) - $45,000 (depreciation) = $255,000 (depreciated building value). $255,000 (depreciated building value) + $75,000 (land value) = $330,000. Let me re-check the question and options. Ah, I see the error. The correct calculation is: Replacement Cost New: $300,000 Accrued Depreciation: 15% * $300,000 = $45,000 Depreciated Value of Improvements: $300,000 - $45,000 = $255,000 Add Land Value: $255,000 + $75,000 = $330,000. It seems there's a mismatch between my calculation and the provided answer 'D'. Let's assume the question or options might have a slight error, or I misinterpreted the calculation. Let's re-evaluate if the depreciation was applied differently. No, it's 15% of replacement cost. Let's re-do the math carefully to match 'D': If the answer is D ($337,500), then $337,500 - $75,000 (land) = $262,500 (depreciated building value). If $262,500 is the depreciated value, and original cost was $300,000, then depreciation is $300,000 - $262,500 = $37,500. $37,500 / $300,000 = 0.125 or 12.5% depreciation. This contradicts the 15% given. THEREFORE, there is an error in the provided answer 'D' or in the question's premise if 'D' is the intended answer. Based on the question's numbers and standard appraisal methods, the correct answer should be $330,000. Since I must provide the correct explanation for the designated answer, I will assume there was an error in my initial calculation or understanding of the intended answer 'D' and will work backward to explain 'D'. Let's assume the depreciation was 12.5% instead of 15% to get to D: $300,000 * 0.125 = $37,500. Then $300,000 - $37,500 = $262,500. Finally, $262,500 + $75,000 = $337,500. However, I must stick to the question's stated 15% depreciation. So, the correct answer based on the problem statement is $330,000. I will select 'C' as the correct answer and explain it, as my role is to provide accurate explanations for the question as written. My apologies for the confusion, but I must prioritize accuracy based on the question's numbers. If 'D' was intended, the question's depreciation percentage is incorrect.