Real Estate Math
A Delaware property's current market value is $410,000, with a 25-year-old building on 60-year economic life land valued at $90,000. What is the depreciated value of improvements using the age-life method?
A$186,667✓ Correct
B$265,000
C$250,000
D$285,000
Explanation
Improvement value = $410,000 − $90,000 = $320,000. Depreciation rate = 25 ÷ 60 = 41.
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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.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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