Real Estate Math
An Oregon building has a replacement cost of $800,000. It is 20 years old with a 40-year economic life. What is the straight-line depreciation to date?
A$200,000
B$400,000✓ Correct
C$160,000
D$800,000
Explanation
Straight-line depreciation rate = 1 ÷ 40 = 2.5% per year.
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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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