Using the index method to estimate reproduction cost, what is multiplied by the index factor?

In the index method for estimating reproduction cost, the original construction cost is multiplied by the index factor to arrive at the current reproduction cost of the property. This approach involves taking the original cost to build the property and adjusting it for inflation or changes in costs over time by applying an index factor.

The index factor reflects changes in the market and construction costs since the property was initially built, allowing appraisers to estimate what it would cost to reproduce the property at current prices. Using the original construction cost ensures that the calculation is grounded in the historical data of the specific property, providing a more accurate estimate of its reproduction cost.

This method is particularly useful because it accounts for inflation and current material and labor costs, ensuring that the appraised value reflects current market conditions rather than outdated figures.