Certified Residential Appraiser Practice Exam

What is defined as the expected amount an entrepreneur anticipates receiving for their project contribution?

1. Entrepreneurial profit

2. Entrepreneurial incentive

3. Functional obsolescence

4. External obsolescence

The correct answer is: Entrepreneurial incentive

The correct choice defines the expected amount an entrepreneur anticipates receiving for their project contribution as "entrepreneurial incentive." The entrepreneurial incentive represents the reward that an entrepreneur expects to gain from their investment of time, effort, and resources into a project. This aligns with the concept that for entrepreneurs, the potential return on investment motivates them to engage in business activities, take risks, and innovate. Entrepreneurial profit, while related, specifically refers to the actual profit earned after accounting for costs and expenses, rather than the anticipated amount. Functional obsolescence and external obsolescence pertain to value loss in properties due to design flaws or external factors, respectively, which are not applicable in this context of entrepreneurial expectation and incentive related to project contribution.