Property Valuation
In Illinois, an appraiser is estimating depreciation for a 15-year-old building with a total economic life of 60 years. What is the accrued depreciation percentage using the age-life method?
A15%
B20%
C25%✓ Correct
D30%
Explanation
Using the age-life method: Depreciation % = Effective Age ÷ Total Economic Life = 15 ÷ 60 = 0.25 = 25%.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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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