California Real Estate SalespersonProperty Valuation and Financial AnalysisHard
An appraiser determines that a building has a total economic life of 45 years and an effective age of 18 years based on its condition and upgrades. Based on this information, what is the building's remaining economic life?
- A25 years
- B27 years
- C30 years
- D18 years
Show answer & explanationAnswer & explanation
Correct answer: B. 27 years
Remaining economic life is calculated as total economic life minus effective age: 45 years − 18 years = 27 years. This figure represents the estimated number of years the improvements are expected to continue contributing value.
Why the other options are wrong
- A. This does not match the correct subtraction of the given figures.
- C. This overstates the remaining life beyond the correct calculation.
- D. This is the effective age, not the remaining economic life.
Remaining Economic Life
The estimated number of years a building is expected to continue contributing value, calculated as total economic life minus effective age.
- Formula: Total Economic Life − Effective Age = Remaining Economic Life
- Effective age reflects condition, not chronological age
- Used in straight-line depreciation calculations
Memory trick: Life left equals total life minus how old it acts.