Posted by AlexCO on June 07, 2009 at 15:03:12:
In Reply to: Re: RE Licence Textbook is WRONG, I'M RIGHT! posted by michaela-CA on June 07, 2009 at 09:04:11:
If this is a strict math question, you're right, michaela.
But, as David Krulac explained, the depreciation is commonly defined as N% of the purchase price (the land value excluded) every year, not N% of the previous year's value. Because this is a problem given to a RE license applicant, this should be taken accounted for.
Here in the questioned problem set, N is assumed as 5% for simplicity and not 100/27.5 for actual definition of depreciation for a residential property.
Under this assumption, D should be the correct answer.