California Real Estate Practice Exam

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Study for the California Real Estate Exam. Engage with multiple choice questions and detailed explanations to sharpen your knowledge. Get ready to ace 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.