Question

Which type of cost is calculated using similar, but not identical, building materials resulting in equal utility as compared with the subject property?

Answer 1

The correct answer is replacement.

Step-by-step explanation:

The replacement cost is a value assumed by the company in order to replace an asset of equal or lesser value.

The decision to accept or not the replacement must be related to the calculation of the net present value (NPV) of future entries and exits of money. Once the asset is acquired, it should automatically depreciate.