Real Estate Math
A building in Alaska has a replacement cost of $800,000. It is 25 years old with a 50-year economic life. Using straight-line depreciation, what is the depreciated value?
A$200,000
B$400,000✓ Correct
C$500,000
D$600,000
Explanation
Annual depreciation = $800,000 ÷ 50 years = $16,000/year. Accumulated depreciation = $16,000 × 25 = $400,000. Depreciated value = $800,000 − $400,000 = $400,000.
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