---
title: "Value of a 20-year-old building"
subject: "Construction Management"
chapter: 13
key: "semester_8/construction_management:value-building-20-years-2075"
source: https://www.bctengineer.com/q/semester_8/construction_management/value-building-20-years-2075
site: BCT Engineering
---

# Value of a 20-year-old building

Construction Management · Chapter 13: Valuation

- Asked in: 2075 Bhadra, 6 marks
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/value-building-20-years-2075
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-13

## Question

Calculate the value of a building built 20 years ago having plinth area 500 sqm, constructed in the land of 1000 sqm. Current market value of the land is Rs. 25000 per sqm and rate of building is Rs. 50,000 per sqm. Assume suitable data if necessary.

## Short answer

Land value Rs2,50,00,000; building replacement cost Rs2,50,00,000. With 80-year life, 10% scrap, straight-line depreciation for 20 years is Rs56,25,000, so building value Rs1,93,75,000; total property value Rs4,43,75,000.

## Answer

**Assumptions:** RCC building with a total life of 80 years; scrap value = 10% of the cost; straight-line depreciation (an alternative: sinking fund method). Rate of building (Rs 50,000/m²) is the present cost of construction.

**Land** = 1000 × 25,000 = Rs 2,50,00,000

**Present cost of building** = 500 × 50,000 = Rs 2,50,00,000

**Depreciation (straight line)**

$$
\begin{aligned}
\text{Annual depreciation} &= \frac{C - S}{n} = \frac{0.9 \times 2{,}50{,}00{,}000}{80} = Rs\ 2{,}81{,}250 \\
\text{Depreciation for 20 years} &= 20 \times 2{,}81{,}250 = Rs\ 56{,}25{,}000 \; (22.5\%)
\end{aligned}
$$

**Present value of building** = 2,50,00,000 − 56,25,000 = Rs 1,93,75,000

**Value of property** = land + building = 2,50,00,000 + 1,93,75,000 = Rs 4,43,75,000

**Answer: Value of the property is about Rs 4.44 crore (Rs 4,43,75,000).**

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What is the present cost of the building (500 sqm at Rs 50,000/sqm)?
   A. Rs 2,50,00,000
   B. Rs 2,50,000
   C. Rs 25,00,000
   D. Rs 1,93,75,000
   Answer: A. 500 x 50,000 = Rs 2,50,00,000. (Key point: Present cost of building)

2. Using straight line with 10% scrap and 80 years life, what is the annual depreciation?
   A. Rs 3,12,500
   B. Rs 2,81,250
   C. Rs 2,50,000
   D. Rs 56,25,000
   Answer: B. (C - S)/n = 0.9 x 2,50,00,000 / 80 = Rs 2,81,250. (Key point: Annual depreciation)

3. What is the depreciated value of the building after 20 years?
   A. Rs 56,25,000
   B. Rs 2,50,00,000
   C. Rs 1,93,75,000
   D. Rs 1,50,00,000
   Answer: C. Depreciation 20 x 2,81,250 = 56,25,000; 2,50,00,000 - 56,25,000 = Rs 1,93,75,000. (Key point: Present value of building)

4. How is the property value finally found?
   A. Depreciated building value only
   B. Land value only
   C. Depreciated building value plus land value
   D. Present cost of building plus land
   Answer: C. Land does not depreciate, so value = 1,93,75,000 + 2,50,00,000 = Rs 4,43,75,000. (Key point: Total property value)

## Close variants set in other exams

- [Value of a 10-year-old building](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-building-10-years-2071) — Construction Management, chapter 13, asked 2×

## Related in Construction Management

- [Capitalized value of 80-year building](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-building-80-years-2078) — Construction Management, chapter 13
- [Job layout for 1000 sqm public building](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Ajob-layout-public-building-2079) — Construction Management, chapter 6
- [Fair market value of Tata Sipradi showroom](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-tata-sipradi-showroom) — Construction Management, chapter 13
- [Loan value against mortgage of a building](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-building-mortgage-loan-2073) — Construction Management, chapter 13
- [Capitalized value of three-storied RCC building](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-three-storey-rcc-2079) — Construction Management, chapter 13
- [Capitalised value from Rs 20,000 monthly rent](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-building-20000-rent-2078) — Construction Management, chapter 13

## Related in other subjects

- [Channel earthwork and land area, 50 cm fall](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Achannel-land-acquisition-h) — Estimating and Costing, chapter 6, asked 2×
- [Gumbel 500-year flood, 95% limits, 30 years](https://www.bctengineer.com/question.md?key=semester_5%2Fengineering_hydrology%3Agumbel-30yr-100-50-1200-1060-2) — Engineering Hydrology, chapter 6
- [Dividend per ordinary share, 500 shares, tax 20%](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Adividend-per-share-500-shares-b81) — Project Engineering, chapter 6
- [EVA; 10 days, 50 labour days at Rs 1000](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeva-numerical-labour-days-1000) — Project Engineering, chapter 4, asked 2×