Property Valuation
A Minnesota appraiser identifies 'economic life' of a building as 50 years. After 25 years, the building's 'remaining economic life' would be:
A50 years
B25 years✓ Correct
C12.5 years
DIt depends on maintenance only
Explanation
Remaining economic life = Total economic life - Effective age. If the building has a 50-year economic life and has 25 years of effective age, the remaining economic life is 25 years. Economic life is distinct from physical life (how long the structure could stand) and is based on how long the improvements will continue to contribute value to the property. This affects depreciation calculations.
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