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Cost ApproachEASY13.6% of exam

A hypothetical model allocates 100% of original depreciable cost evenly over 50 years to zero residual. What annual percentage of original cost is allocated?

Correct Answer

A) 2.0%

100÷50 = 2 percent per year. Common errors: inverting the ratio (50 ÷ 100) gives 50.0%; using a double-declining rate (2 ÷ 50) instead of straight-line gives 4.0%; reporting the share remaining after one year instead of the annual charge gives 98.0%.

Answer Options
A
2.0%
B
4.0%
C
50.0%
D
98.0%

Why This Is the Correct Answer

100÷50 = 2 percent per year. Common errors: inverting the ratio (50 ÷ 100) gives 50.0%; using a double-declining rate (2 ÷ 50) instead of straight-line gives 4.0%; reporting the share remaining after one year instead of the annual charge gives 98.0%.

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