Hi..
In the cost approach, the second last para talks about replacement cost with a normal ceiling. The next line says the higher ceiling results in increased heating and AC costs of 50k per year. Since we chose replacement with normal cost, is it correct to reduce the value to the extent of 500k which is a negative in case we have a higher ceiling ?
We are starting with replacement cost but at the end we are valuing a RE property Replacement cost is the value of that property built today(flawless condition) we could have paid this amount if the building is flawless but we have to invest in repairing etc so we adjust these to get the value of the property we are valuing.