Work out cost approach valuation instantly with clear inputs, formula shown and shareable results.
The cost approach asks what it would cost to replace the building today, deducts depreciation for age and obsolescence, then adds the land value. Straight line age-life depreciation is the simplest method: the ratio of effective age to total economic life. It is the primary approach for special-purpose buildings with no rental or sales market.
Depreciation
Depreciation = replacement cost x effective age / total economic life
Indicated value
Value = (replacement cost - depreciation) + land value
Depreciation = replacement cost x effective age / total economic life. The cost approach asks what it would cost to replace the building today, deducts depreciation for age and obsolescence, then adds the land value.
It reflects condition rather than the calendar. A well maintained forty year old building may have an effective age of twenty, while a neglected new one can have an effective age well above its actual age.
This calculator takes 4 inputs: Replacement cost new, Effective age, Total economic life, Land value. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.