Real Estate Math
A Delaware property has a replacement cost of $320,000. It is 15 years old with a 40-year total economic life. What is the depreciation using the straight-line method?
A$200,000✓ Correct
B$160,000
C$80,000
D$48,000
Explanation
Annual depreciation rate = 1 ÷ 40 years = 2.5% per year. Total depreciation = $320,000 × 2.5% × 15 years = $320,000 × 37.5% = $120,000. Depreciated value = $320,000 − $120,000 = $200,000.
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