Real Estate Math
A Delaware building was constructed for $500,000 and depreciates at 2% per year using straight-line depreciation. What is the book value after 10 years?
A$350,000
B$400,000✓ Correct
C$450,000
D$300,000
Explanation
Annual depreciation = $500,000 × 0.02 = $10,000.
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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
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