In the formula MV = S + RCN - D, what does D stand for?

In the formula MV = S + RCN - D, what does D stand for?

• A. Accumulated depreciation
• B. Market value of site
• C. Replacement cost
• D. Market value of property

Answer: (A)

This formula is about the cost approach to value: you estimate market value by combining the land value (site value) with the cost to replace the structure today (replacement cost new), and then subtract depreciation to reflect wear, aging, and obsolescence. The D term represents depreciation — specifically accumulated depreciation, the total depreciation that has accumulated over time. So MV = S + RCN - D uses D to reduce the total cost to account for loss in value from age and condition. That’s why the correct interpretation is accumulated depreciation. The other terms correspond to the remaining parts: site value is the land component, replacement cost is the cost to build anew, and market value is the resulting figure.

This formula is about the cost approach to value: you estimate market value by combining the land value (site value) with the cost to replace the structure today (replacement cost new), and then subtract depreciation to reflect wear, aging, and obsolescence. The D term represents depreciation — specifically accumulated depreciation, the total depreciation that has accumulated over time. So MV = S + RCN - D uses D to reduce the total cost to account for loss in value from age and condition. That’s why the correct interpretation is accumulated depreciation. The other terms correspond to the remaining parts: site value is the land component, replacement cost is the cost to build anew, and market value is the resulting figure.