What is the current value of a property if its land-to-improvements value ratio is 20% - 80%, and the improvements were built at $120/SF on a 3,000 SF house, after averaging $1,200 depreciation per year over 10 years?

What is the current value of a property if its land-to-improvements value ratio is 20% - 80%, and the improvements were built at $120/SF on a 3,000 SF house, after averaging $1,200 depreciation per year over 10 years?

• A. $360,000
• B. $420,000
• C. $438,000
• D. $450,000

Answer: (C)

To determine the current value of the property based on the given information, start by calculating the total cost of the improvements (the house itself). With improvements built at a rate of $120 per square foot for a 3,000 square foot home, the initial cost of the improvements can be found by multiplying the cost per square foot by the total square footage: \[ Cost\ of\ Improvements = $120/SF \times 3,000\ SF = $360,000 \] Next, to account for the depreciation of the improvements over ten years at an average rate of $1,200 per year, you can use the total depreciated amount: \[ Total\ Depreciation = $1,200/year \times 10\ years = $12,000 \] So now, subtract this total depreciation from the initial cost of improvements to get the current value of the improvements: \[ Current\ Value\ of\ Improvements = $360,000 - $12,000 = $348,000 \] Now that you have the current value of the improvements, you can determine the land value using the land-to-improvements ratio. Given that the land-to-improvements ratio is 20% (land)

To determine the current value of the property based on the given information, start by calculating the total cost of the improvements (the house itself). With improvements built at a rate of $120 per square foot for a 3,000 square foot home, the initial cost of the improvements can be found by multiplying the cost per square foot by the total square footage:

[

Cost\ of\ Improvements = $120/SF \times 3,000\ SF = $360,000

]

Next, to account for the depreciation of the improvements over ten years at an average rate of $1,200 per year, you can use the total depreciated amount:

[

Total\ Depreciation = $1,200/year \times 10\ years = $12,000

]

So now, subtract this total depreciation from the initial cost of improvements to get the current value of the improvements:

[

Current\ Value\ of\ Improvements = $360,000 - $12,000 = $348,000

]

Now that you have the current value of the improvements, you can determine the land value using the land-to-improvements ratio. Given that the land-to-improvements ratio is 20% (land)