Property Valuation
What is 'economic life' versus 'physical life' in real estate appraisal and what does each measure?
AThey measure the same thing; appraisers use the terms interchangeably
BPhysical life is the total period a structure can remain standing before structural failure; economic life is the shorter period during which the improvement contributes positively to property value — appraisers use economic life for depreciation calculations✓ Correct
CEconomic life is always longer than physical life
DPhysical life applies only to residential structures; economic life to commercial
Explanation
Physical life is how long a building can stand with maintenance (often 50-100+ years). Economic life ends when the building's costs exceed its income contribution — after which demolition and redevelopment is economically justified.
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