In the cost method formula MV = S + RCN - D, what does S represent?

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Study for the Manitoba Real Estate Exam Module 1. Prepare with comprehensive multiple choice questions and detailed explanations. Ace your exam and start your real estate career!

Multiple Choice

In the cost method formula MV = S + RCN - D, what does S represent?

Explanation:
In the cost method, the total market value is built from the land value plus the value of the improvements after depreciation. The S term represents the market value of the site—the value of the land itself if it were vacant. It’s separate from the building’s replacement cost (the cost to recreate the improvements) and from depreciation (the loss in value due to wear, obsolescence, etc.). So, S = the land value of the site.

In the cost method, the total market value is built from the land value plus the value of the improvements after depreciation. The S term represents the market value of the site—the value of the land itself if it were vacant. It’s separate from the building’s replacement cost (the cost to recreate the improvements) and from depreciation (the loss in value due to wear, obsolescence, etc.). So, S = the land value of the site.

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