Real Estate Appraisal Practice Exam

The formula that incorporates the square-foot method to find reproduction cost is indeed the correct one, as it specifically breaks down the components needed to accurately assess the reproduction cost new of a property.

Using this formula, the gross living area is multiplied by the cost per square foot, which provides a foundational cost based solely on the area designated for living. From that base cost, you then add the cost associated with non-living areas, acknowledging that certain areas, such as garages or basements, contribute to the total cost but are not classified as part of the living area. Additionally, including the cost of improvements is crucial, as it takes into account enhancements or alterations made to the property that can significantly affect its overall reproduction cost.

This comprehensive approach ensures that all relevant factors are considered in determining the true reproduction cost new, rather than only focusing on living space or simple market pricing.