Real Estate Math
A building was constructed for $400,000 and depreciates at 2% per year (straight-line). What is the depreciated value after 10 years?
A$300,000
B$320,000✓ Correct
C$340,000
D$360,000
Explanation
Annual depreciation = $400,000 × 2% = $8,000. After 10 years: $8,000 × 10 = $80,000.
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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.
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.
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.
Math Concepts
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