Cost approach Valuation

CFA Level II Alternative Investments
#1

Hi,

Would anybody confirm the following pls? and explain who to compute Economic obsolescence ?:

Cost approach valuation:

Value Asset = 1) Value of Land + 2) Replacement Cost - 3) Economic Depreciation

where

  1. Economic Depreciation = a) Replacement Cost - b)Currable Costs - c) Incurrable costs - d) Economic obsolescence

and where

c) = (Replacement Cost - Curable costs) x (Effective age/ Total Age)

d) = ?

Thanks

Alex