Real Estate Math
If a property depreciates at 2% per year using straight-line depreciation, how many years will it take to fully depreciate?
A25 years
B40 years
C50 years✓ Correct
D30 years
Explanation
100% ÷ 2% per year = 50 years. At 2% annual depreciation, the property is fully depreciated in 50 years.
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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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