Which statements regarding the residual method is false

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Problem 1: Which of the following statements regarding the residual method is FALSE?

(1) Of financially feasible uses, the highest and best use is the use that produces the highest residual land value consistent with the market's acceptance of risk and with the rate of return warranted by the market for that use.

(2) An appraiser should take special care in considering the assumptions of highest and best use because in testing alternate uses any difference in the residual income attributable to the land is magnified by the process of capitalization.

(3) In analyzing a redevelopment scenario, it is a given that the improvements will be demolished so the highest and best use of the site as improved is irrelevant.

(4) The residual land value is found by estimating the value of the proposed use and subtracting the cost of the labour, capital, and entrepreneurial coordination expended to create the improvements.

Reference no: EM132906444

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