How should the firm appraise the plant and at what value

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Problem

The firm ABC LLP., receives an assignment to appraise a manufacturing plant in CA. The original cost of the plant was $2,500,000. The plant has suffered an estimated $900,000 in physical depreciation. The plant produces annual net income of $100,000 and has an estimated capitalization rate of 6%. But six similar plants in the neighborhood have recently sold for $1,200,000. Considering the Market, Income, and Cost approaches, how should the firm appraise the plant, and at what value? What if the plant was unique?

Reference no: EM131783168

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