Real Estate Math

A Missouri home's replacement cost new is $260,000. It has an effective age of 15 years and an economic life of 60 years. Using the age-life method, what is the depreciated value of the improvements?

A$195,000✓ Correct

B$182,000

C$216,000

D$175,000

Explanation

Depreciation % = 15/60 = 25%. Depreciated value = $260,000 × (1 − 25%) = $260,000 × 0.75 = $195,000.

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