Which of the following is included in the calculation of depreciation in the Cost Approach?

The inclusion of Reproduction Cost New in the calculation of depreciation in the Cost Approach is essential because it represents the current cost to recreate an exact replica of the subject property with the same materials and standards as it was originally built. When appraising property using the Cost Approach, it is necessary to first determine the Reproduction Cost New as it serves as the baseline figure for the total value of the property.

Once that cost is established, the appraiser evaluates the physical condition and functional obsolescence of the property to calculate the depreciation. This allows the appraiser to arrive at an accurate estimate of the market value of the property by accounting for any loss in value due to deterioration or outdated features. Thus, the Reproduction Cost New is a critical element in this process, making it integral to the calculation of depreciation.