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THE COST APPROACH <br /> The rational of this approach is that the investor/purchaser will not pay more for the subject <br /> property than it would cost to produce a substitute property with the same utility as the subject. <br /> The first step in the process is to calculate the land value of the subject as if vacant and available <br /> to be put to its highest and best use. This is done by analysis of comparable site sales in the same <br /> manner illustrated in the sales comparison approach. Page 21 <br /> The second step is to calculate the reproduction cost new of the improvements. Replacement <br /> cost may be used if circumstances dictate. Reproduction is using the same components. <br /> Replacement is using different components than the original,but which are contemporary and <br /> have similar utility. Pages 28 <br /> • <br /> The third step is to calculate the loss to value because of physical, functional, or external factors. <br /> If these occur, they will be explained as they occur. Page 28 <br /> 20 <br />