Real Estate Math

A NH building costs $1.2 million to replace. It is 25 years old with a 50-year economic life. What is the total physical depreciation using the age-life method?

A$600,000✓ Correct
B$300,000
C$400,000
D$480,000

Explanation

Depreciation rate = Effective Age / Economic Life = 25 / 50 = 50%. Physical depreciation = 50% × $1,200,000 = $600,000.

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