A ten-year-old comparable sold for $295,000 and an otherwise identical twenty-year-old comparable sold for $271,000. What annual rate of depreciation in dollars does the pair indicate?
Correct Answer
A) $2,400 per year
Why this is correct: the pair shows $24,000 of difference spread over the ten years that separate the two properties. Calculation: $24,000 ÷ 10 = $2,400 per year. Why the other choices are wrong: $24,000 is the whole difference rather than the annual rate; $1,200 divides by the older property’s twenty years instead of by the ten-year gap; $2,950 is one percent of the newer sale price and follows from nothing in the pair.
Why This Is the Correct Answer
Why this is correct: the pair shows $24,000 of difference spread over the ten years that separate the two properties. Calculation: $24,000 ÷ 10 = $2,400 per year. Why the other choices are wrong: $24,000 is the whole difference rather than the annual rate; $1,200 divides by the older property’s twenty years instead of by the ten-year gap; $2,950 is one percent of the newer sale price and follows from nothing in the pair.
More Sales Comparison Questions
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