Real Estate Math
A building has a replacement cost new of $500,000. It has a remaining economic life of 30 years and a total economic life of 50 years. What is the accrued depreciation using straight-line method?
A$200,000✓ Correct
B$100,000
C$250,000
D$150,000
Explanation
Age = 50 − 30 = 20 years. Annual depreciation = $500,000 ÷ 50 = $10,000/yr.
People Also Study
Related Alabama Questions
- A property has a chronological age of 20 years and a total economic life of 50 years. Using the age-life method, what is the depreciation rate?Property Valuation
- Which of the following is NOT a valid method to estimate accrued depreciation in the cost approach?Property Valuation
- When an appraiser says a property has 'economic life remaining' of 20 years, it means:Property Valuation
- A property's replacement cost new is $380,000. The land value is $60,000. Accrued depreciation is $95,000. What is the indicated value by the cost approach?Real Estate Math
- In the cost approach, economic life refers to:Property Valuation
- A building has a gross annual income of $120,000, vacancy and collection loss of 8%, and operating expenses of $35,000. What is the net operating income (NOI)?Real Estate Math
- A building has a gross annual income of $96,000, vacancy loss of 5%, and operating expenses of $28,000. What is the net operating income (NOI)?Real Estate Math
- A building has 12 units renting at $750/month each. The vacancy rate is 5%. What is the annual effective gross income?Real Estate Math
Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →