The subject dwelling has an estimated total economic life of 55 years and an effective age of 22 years. What is the remaining economic life?
Correct Answer
B) 33 years
55−22 = 33 years remaining. Common errors: adding effective age to total life instead of subtracting gives 77 years; reporting the effective age instead of the remaining life gives 22 years; reporting the total economic life gives 55 years.
Why This Is the Correct Answer
Option B is correct because remaining life = total economic life - effective age = 55 - 22 = 33 years.
Why the Other Options Are Wrong
Option A: 22 years
Option A, 22 years, is the effective age, not the remaining life. Remaining life is 55 - 22 = 33 years.
Option C: 55 years
Option C, 55 years, is the total economic life, not the remaining life. Subtracting the 22-year effective age gives 33 years.
Option D: 77 years
Option D, 77 years, adds effective age to total life instead of subtracting: 55 + 22 = 77. The identity gives remaining life as 55 - 22 = 33 years.
Used plus left equals total
Effective age is life used, remaining life is life left, and together they equal total economic life.
How to use: Use this identity to solve for whichever of the three life figures is missing.
Exam Tip
Identify which life figure the question asks for before computing; the given figures often appear as distractors.
Common Mistakes to Avoid
- -Adding effective age to total life
- -Reporting effective age as remaining life
- -Confusing total economic life with remaining economic life
Concept Deep Dive
Analysis
This question tests the economic life relationship: total economic life equals effective age plus remaining economic life. Rearranging gives remaining life = total life - effective age. The candidate must identify which figure is asked for.
Background Knowledge
In the age-life framework, effective age plus remaining economic life equals total economic life. Depreciation under the age-life method is estimated by dividing effective age by total economic life, so these three figures are closely linked.
Real-World Application
An appraiser estimates a 55-year total economic life for a house type and concludes an effective age of 22 years. The appraiser reports a remaining economic life of 33 years and an age-life depreciation ratio of 22/55.
More Cost Approach Questions
Why can equivalent-utility replacement cost be useful for an obsolete improvement?
An appraiser estimates the current replacement cost new of the improvements at $890,000, accrued depreciation from all causes at $170,000, and land value at $325,000. All necessary cost components and depreciation are included in those amounts. What is the indicated property value?
Improvement cost new is $595,000. Separately supported improvement depreciation deductions of $48,000, $27,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $155,000, already reflecting any site losses. What total indicated value results?
What best supports a claimed loss from a bathroom-layout deficiency?
Improvement cost new is $1,850,000. Separately supported improvement depreciation deductions of $310,000, $620,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
Which scenario most strongly supports giving the cost approach substantial weight?
A cost total $650,000 explicitly includes $40,000 of non-realty FF&E outside the appraised real-property interest. Exclude it. Supported realty-only total depreciation is $55,000. Add site $200,000, with no overlap. What real-property cost indication results?
A 2,200-sf dwelling costs $200 per square foot, and a separate 400-sf garage costs $75 per square foot. These costs are complete and do not overlap. Both have an effective age of 15 years and a total life of 50 years, with straight-line depreciation and no salvage value. No site value or other loss is involved. What is the combined depreciated cost of the dwelling and garage?
A new feature in the improvements has a current cost of $45,000 and a market contribution of $18,000. The entire difference is due to superadequacy, with no physical or external loss and no overlap. What is the loss from the superadequacy?
An external influence causes an annual net income loss of $9,600. The capitalization rate for the loss is 8%, and no other economic factors change. What is the indicated loss in value of the whole property, before allocation between site and improvements?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Income Approach
8.2% of exam
Previous Question
Direct and indirect costs of the improvements total $350,000, which excludes a separate incentive equal to 10% of that amount. Total depreciation is estimated at 20% of the full cost including the incentive, and the site value is $180,000. What is the indicated value by the cost approach?
Next Question
A supported internal bathroom-utility deficiency has a physically feasible correction whose full benefit justifies full cost. How is it classified?