Which of the Following Is One Reason That Construction Lenders

question 27

Multiple Choice

Which of the following is one reason that construction lenders typically prefer the cost approach to valuation over the income approach?

• A)The cost approach provides a more conservative estimate of value
• B)The cost approach provides a more optimistic estimate of value
• C)The cost approach is a good indication of the expected value of an income-producing property once construction is complete and it has been leased-up
• D)The cost approach is a better estimate of actual market value of the project

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Definitions:

Long-Run Aggregate-Supply Curve

A vertical curve representing the real output of goods and services that an economy can produce when resources are fully employed, irrespective of the overall price level, over time.

Short-Run Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable temporarily.

Money Supply

At any given time, the total economic assets available in an economy, which consist of cash, coins, and the balances in checking and savings accounts.

Long Run

A period of time sufficient for all inputs in the production process to be adjusted, including both fixed and variable resources.