The improvements on a property have a total economic life of 60 years and an effective age of 24 years. How much remaining economic life do they have?
Correct Answer
B) 36 years
60−24 = 36 years remaining. Common errors: adding effective age to total life instead of subtracting gives 84 years; reporting the effective age instead of the remaining life gives 24 years; reporting the total economic life gives 60 years.
Why This Is the Correct Answer
Option B is correct because remaining life = total life - effective age = 60 - 24 = 36 years.
Why the Other Options Are Wrong
Option A: 24 years
Option A, 24 years, is the effective age itself, not the remaining life. Remaining life is 60 - 24 = 36 years.
Option C: 60 years
Option C, 60 years, is the total economic life. Subtracting the 24-year effective age gives 36 years remaining.
Option D: 84 years
Option D, 84 years, comes from 60 + 24, adding effective age to total life instead of subtracting. The correct result is 60 - 24 = 36 years.
Total equals used plus left
Total life is effective age plus remaining life, so remaining life is total minus effective age.
How to use: Use this to solve for any one of the three life figures.
Exam Tip
Identify which of the three life figures is unknown and rearrange the identity before calculating.
Common Mistakes to Avoid
- -Adding effective age to total life
- -Reporting effective age as remaining life
- -Confusing total life with remaining life
Concept Deep Dive
Analysis
This question tests the simple identity linking total economic life, effective age and remaining economic life. Remaining life equals total life minus effective age.
Background Knowledge
Total economic life can be viewed as effective age plus remaining economic life. Effective age reflects condition and utility, and remaining economic life is the estimated period the improvement will continue to contribute value.
Real-World Application
An appraiser estimates a 60-year economic life for a home with a 24-year effective age. The remaining economic life of 36 years supports comments on the home's future contribution to value.
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