Cost Approach Valuation Calculator

Work out cost approach valuation instantly with clear inputs, formula shown and shareable results.

About Cost Approach Valuation Calculator

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.

Formulas

Depreciation

Depreciation = replacement cost x effective age / total economic life

Indicated value

Value = (replacement cost - depreciation) + land value

Worked example

With the default values below, Cost Approach Valuation Calculator returns Indicated value of $6,750,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Replacement cost newminimum 0: 5,000,000
Effective ageminimum 0 years: 15 years
Total economic lifeminimum 1 years: 60 years
Land valueminimum 0: 3,000,000

Results

Indicated value: $6,750,000.00
Depreciated building value: $3,750,000.00
Accumulated depreciation: $1,250,000.00
Depreciation applied: 25.00% %

Step by step

1Values used
2Depreciation
3Indicated value
4Indicated value= 6,750,000.00
5Depreciated building value= 3,750,000.00
6Accumulated depreciation= 1,250,000.00
7Depreciation applied= 25.00 %

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is the Cost Approach Valuation figure worked out?

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.

What is effective age?

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.

What values do I need to enter?

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.