If Building A was originally built at $400,000 and the current cost index is 350 while it was 200 when built, what is its reproduction cost?

To determine the reproduction cost of Building A, we need to use the cost index method, which compares the original cost of the building with the current cost index to estimate its current cost.

Building A was originally constructed for $400,000. The current cost index is 350, while the cost index at the time it was built was 200.

The formula to calculate the reproduction cost is:

Reproduction Cost = Original Cost × (Current Cost Index / Original Cost Index)

Substituting the values into the formula:

Reproduction Cost = $400,000 × (350 / 200)

First, calculate the ratio of the cost indexes:

350 / 200 = 1.75

Next, multiply the original cost by this ratio:

Reproduction Cost = $400,000 × 1.75 = $700,000

Thus, the reproduction cost of Building A is accurately calculated to be $700,000. This method allows appraisers to adjust the original cost based on changes in construction costs over time, reflecting the current market conditions.