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What does the cost approach to property valuation consider?

  1. Income produced by the property

  2. Replacement costs minus depreciation plus land value

  3. Sales comparison

  4. Mortgage value

The correct answer is: Replacement costs minus depreciation plus land value

The cost approach to property valuation considers the replacement costs of a property, meaning the cost to replace the property if it were to be destroyed, as well as the value of the land. This method assumes that the value of a property is equal to the cost of replacing it minus any depreciation that may have occurred since its construction. This approach does not consider the income produced by the property, as option A suggests, as it is purely based on the cost of the property. The cost approach is also different from the sales comparison method, as mentioned in option C, which takes into consideration the recent sale prices of similar properties in the area. Option D, mortgage value, does not accurately describe the cost approach as it is based on the amount of a loan, rather than the cost of a property.