Real Estate Math
A building cost $500,000 to construct and has an economic life of 40 years. Using straight-line depreciation, what is the annual depreciation?
A$10,000
B$12,500✓ Correct
C$20,000
D$25,000
Explanation
Annual depreciation = Cost ÷ Economic life = $500,000 ÷ 40 = $12,500. Using the values given ($500,000), apply the appropriate formula.. The correct answer is $12,500.. This is a common calculation on the Arkansas real estate exam.
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