A dwelling has an actual age of 15 years, an effective age of 12 years, and a total economic life of 60 years. What is its remaining economic life?
Correct Answer
D) 48 years
Why this is correct: remaining economic life is total economic life less effective age. Calculation: 60 - 12 = 48 years. Why the other choices are wrong: 45 years subtracts the actual age, which the effective age was measured precisely to replace; 60 years is the total life before any is used up; 12 years is the effective age itself.
Why This Is the Correct Answer
Why this is correct: remaining economic life is total economic life less effective age. Calculation: 60 - 12 = 48 years. Why the other choices are wrong: 45 years subtracts the actual age, which the effective age was measured precisely to replace; 60 years is the total life before any is used up; 12 years is the effective age itself.
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Using extraction, three sales of 20-year-old homes show about 20% total depreciation. The implied straight-line annual rate is:
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