Principles, Property, and Land Use Practice Question

Question

A supervising broker is reviewing a transaction file for the Arizona Real Estate Salesperson Exam involving cost approach and Arizona Department of Real Estate. Which statement is most accurate for exam purposes? (Item 77)

Answer choices

1. A. Combine land value with replacement cost less depreciation in a way that fits Arizona exam practice.
2. B. The rule applies only to commercial transactions and never to residential transactions.
3. C. Client funds may be mixed with business funds if the broker reconciles the account later.
4. D. The issue can be ignored if the parties want to close quickly.

Correct Answer

A. Combine land value with replacement cost less depreciation in a way that fits Arizona exam practice.

Explanation

The correct answer is A because cost approach requires candidates to combine land value with replacement cost less depreciation. The Arizona reference keeps the scenario tied to state licensing practice, while the other options rely on unsafe assumptions about oral custom, escrow, client preference, independent licensee authority, or ignoring written duties.

Question details

• Difficulty: easy
• Domain: Principles, Property, and Land Use
• Objective: cost approach

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