Real Estate Math
A Missouri building's replacement cost is $420,000. It has 30% physical depreciation. The depreciated cost of improvements is:
A$126,000
B$294,000✓ Correct
C$310,000
D$390,000
Explanation
Depreciation amount = $420,000 x 0.30 = $126,000.
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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.
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.
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.
Math Concepts
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