California Real Estate Practice Exam

A house has an estimated reproduction cost of $200,000 and estimated depreciation of 30%. What is the depreciated cost?

1. $160,000

2. $140,000

3. $180,000

4. $200,000

The correct answer is: $140,000

The depreciated cost is the amount that a house has lost value due to normal wear and tear, and it is calculated by applying the depreciation percentage to the original value. In this case, a 30% depreciation means the house has lost 30% of its value, leaving it with $200,000 - 30% ($200,000) = $200,000 - $60,000 = $140,000. The options A, C, and D are incorrect because they do not take into account the depreciation percentage and therefore do not reflect the correct depreciated cost. Option A removes 30% from the original value instead of removing it from the estimated depreciation, Option C does not consider the depreciation at all, and Option D suggests that the depreciated cost is the same as the original cost, which is incorrect. Therefore, the correct answer is Option B, $140,000.