ABSTRACT
Traditionally it was considered that the cost approach should only be used when value cannot be arrived at by any of the other valuation methods. As such, it was considered the least reliable and accurate. However, this is not necessarily true nowadays. In relation to rating valuation, it has been stated that:
In this chapter … • The cost approach to valuation. • When and why it is used. • The reliability of its basis. • The contractor’s basis and the depreciated replacement cost (DRC) method. • How age and obsolescence of buildings can be assessed and suitable adjustments for it
made in the valuation. • The format and content of calculations using this valuation approach. • Costs in use.
