California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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If a house has a reproduction cost of $300,000 and an economic life of 50 years, what is the annual depreciation using the straight line method?

$5,000
$6,000
$7,000
$8,000

The correct answer is: $6,000

The annual depreciation using the straight line method is calculated by dividing the reproduction cost by the economic life. In this case, $300,000 divided by 50 years equals $6,000 per year. Option A is incorrect because $5,000 is not the result of dividing $300,000 by 50. Option C is incorrect because it is the result of dividing $350,000 by 50, which is a different reproduction cost. Option D is incorrect because it is the result of dividing $400,000 by 50, which is also a different reproduction cost. Therefore, the correct answer is B, as it is the only option that correctly represents the annual depreciation for a reproduction cost of $300,000 and an economic life of 50 years.